Seyfarth Synopsis: August 31 was the California Legislature’s last day to send bills to Governor Brown for his approval or veto by his September 30 deadline. Chief among them are bills addressing sexual harassment.

2018, the year of #MeToo, saw California Senators and Assembly Members introduce numerous bills on sexual harassment-prevention, often followed by their colleagues’ response of “me too!” By the August 31 bill-passing deadline, the Legislature approved no fewer than 12 sexual harassment-related bills, as well as bills relating to lactation accommodations, gender quotas for corporation boards of directors, and various other labor and employment-related bills.

Below is a summary of passed bills now before Governor Brown for his approval or veto. Once the Governor acts (by his own September 30 deadline), we’ll provide an update on all labor and employment-related bills enacted into law this Session, as well as those bills that failed to pass and any that met a gubernatorial veto.

Sexual Harassment

Limiting Settlement Agreements. For settlement agreements entered into on or after January 1, 2019, SB 820 would prohibit and make void any provision that prevents the disclosure of information related to civil or administrative complaints of sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. SB 820 expressly authorizes provisions that (i) preclude the disclosure of the amount paid in settlement and (ii) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official. SB 820 suggests that a violation of its provisions would give rise to a cause of action for civil damages.

Banning Waivers of Rights to Testify. As to any contract or settlement agreement entered into on or after January 1, 2019, SB 3109 would make void and unenforceable any provision that waives a party’s right to testify in a legal proceeding (if required or requested by court order, subpoena or administrative or legislative request) regarding criminal conduct or sexual harassment on the part of the other contracting party, or the other party’s agents or employees.

Banning Contractual Limits on Disclosure and Effectively Banning Arbitration Agreements. For agreements entered into, modified, or extended on or after January 1, 2019, AB 3080 would forbid any business to require, as a condition of employment , of conferring an employment benefit, or of entering a contract:

that a job applicant, employee, or independent contractor not disclose instances of sexual harassment suffered, witnessed, or discovered in the work place or in performance of the contract, opposing unlawful practices, or participating in harassment and discrimination related investigations or proceedings, or

that a job applicant or employee waive any right, forum, or procedure (e.g,, arbitration) for a violation of the FEHA or Labor Code, including any requirement that an individual “opt out” or take affirmative action to preserve such rights.

AB 3080 would make actionable any threatened or actual retaliation against an individual who refuses to consent to the forbidden requirements. AB 3080 would authorize injunctive relief and attorney’s fees to any plaintiff who proves a violation. Possibly because much of AB 3080 could be held preempted by the FAA, AB 3080 contains a severability clause by which the rest of the law will remain in effect if a court finds certain sections invalid.

Extending Liability for Employers and for Businesses Using Labor Contractors. AB 3081 would amend the FEHA and Labor Code to: (1) add status as a sexual harassment victim to existing prohibitions on discrimination against employees who are victims of domestic violence, sexual assault, or stalking; (2) create a rebuttable presumption of unlawful retaliation if the employer—within 30 days of notice of the victim’s status—discharges or threatens to discharge, demotes, suspends, or otherwise discriminates against a victim employee; (3) make a business jointly liable for harassment of workers supplied by the business’s labor contractor (existing law similarly extends liability for the contractor’s failure to pay wages and obtain valid workers’ compensation coverage); (4) prohibit businesses from shifting to their labor contractors duties or liabilities under the Labor Code workers’ compensation insurance provisions.

Expanding Record Retention Duties. AB 1867 would require employers with 50 or more employees to maintain records of internal employee complaints alleging sexual harassment for at least five years after the last day of employment of either the complainant or the alleged harasser named in the complaint, whichever is later. If an employer fails to comply, then AB 1867 would allow the DFEH to seek an order requiring the employer to do so.

Extending the Deadline for Harassment Complaints. AB 1870 would extend a complainant’s time to file an administrative charge with the DFEH from one year to three years after the alleged incident. This expansion of the limitations period would apply to all types of FEHA-prohibited conduct, including sexual harassment.

Adopt or reject specified judicial decisions regarding sexual harassment (in each case expanding employer liability). Specifically, SB 1300 would (1) prohibit reliance on Brooks v. City of San Mateo to determine what conduct is sufficiently severe or pervasive to constitute actionable harassment, (2) disapprove any language in Kelley v. Conco Companies that might support different standards for hostile work environment harassment depending on the type of workplace, and (3) affirm Nazir v. United Airlines, Inc.’s “observation that hostile working environment cases involve issues ‘not determinable on paper.’”

Expand an employer’s potential liability under the FEHA for acts of nonemployees to all harassment (removing the “sexual” limitation).

Prohibit an employer from requiring an employee to sign (in specified circumstances) (1) a release of FEHA claims or rights or (2) a document prohibiting disclosure of information about unlawful acts in the workplace.

Prohibit a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so.

Authorize (but not require) an employer to provide bystander intervention training to its employees.

Expanding Scope of Required Sexual Harassment Training.SB 1343 would require an employer of five or more employees—including seasonal and temporary employees—to provide certain sexual harassment training by January 1, 2020. Within six months of their assuming their position (and once every two years thereafter), all supervisors are to receive at least two hours of training, and all nonsupervisory employees are to receive at least one hour. SB 1343 would also require the DFEH to make available a one-hour and a two-hour online training course employers may use and to make the training videos, existing informational posters, fact sheets, and online training courses available in multiple languages.

Effective January 1, 2020, all employers applying for new or renewed registration must demonstrate completion of sexual harassment violence prevention requirements and provide an attestation to the Labor Commissioner.

The Department of Industrial Relations (“DIR”) must convene an advisory committee to develop requirements for qualified organizations and peer-trainers for employers to use in providing training, and the DIR must maintain a list of qualified organizations and qualified peer-trainers.

Employers, upon request, must provide an employee a copy of all training materials.

AB 2079 would also prohibit the Labor Commissioner from approving a janitorial service employer’s request for registration or for renewal if the employer has not fully satisfied a final judgment to a current or former employee for a violation of the FEHA.

Requiring Sexual Harassment Education for In-Home Support Services.AB 3082 would require the Department of Social Services to develop or identify—and provide a copy and description to the Legislature by September 30, 2019—(1) educational materials addressing sexual harassment of in-home supportive services (IHSS) providers and recipients, and (2) a method to collect data on the prevalence of sexual harassment in the IHSS program.

Requiring Sexual Harassment Education by Talent Agencies. AB 2338 would require talent agencies to provide adult artists, parents or legal guardians of minors aged 14-17, and age-eligible minors, within 90 days of retention, educational materials on sexual harassment prevention, retaliation, and reporting resources. For adult model artists only, the talent agency would be required to provide materials on nutrition and eating disorders. Talent agencies would also have to retain, for three years, records showing that those educational materials were provided.

Strengthening Prohibitions Against Harassment With Respect to Professional Relationships. SB 224 would give additional examples of professional relationships where liability for claims of sexual harassment may arise and authorize the DFEH to investigate those circumstances.

Non-Harassment Bills

Opening Doors for Women in the Boardroom. “The time has come for California to bring gender diversity to our corporate boards,” stated co-author Senator Hannah-Beth Jackson in her August 30 press release regarding SB 826. SB 826 would require a publicly held corporation based in California to have a minimum number of females—people who self-identify as women, regardless of their designated sex at birth—on its board of directors. This bill would require each such corporation, by December 31, 2019, to have at least one female director on its board and, if no board seats open up before this date on an all-male board, the corporation would need to increase its authorized number of directors and fill a new seat with a woman. The bill would impose minimum seats that must be filled by women, proportional to the total number of seats, by the end of July 2021. The bill would require the Secretary of State to publish a report by July 1, 2019 of the number of corporations headquartered in California that have at least one female director, and a report by March 1, 2020, detailing (1) the number of corporations that complied with requirements in 2019, (2) the number of corporations that moved their headquarters in or out of California, and (3) the number of publicly held corporations subject to this bill during 2019, but no longer publicly traded.

Corporations failing to comply would face penalties. For each director’s seat not held by a female during at least a portion of the calendar year—when by law it should have been—the corporation would be subject to a $100,000 fine for the first violation and a $300,000 fine for further violations. Corporations that fail to timely file board member information with the Secretary of State would also be subject to a $100,000 fine.

Expanding Lactation Accommodations. Two bills specifying the types of spaces employers must provide women for lactation are now before the Governor. AB 1976 would require employers to make reasonable efforts to provide a room or location (that is not a bathroom, deleting “toilet stall” and inserting “bathroom”) for lactation. The bill would authorize a temporary lactation location if certain conditions are met and provides a narrow undue hardship exemption.

Provide a lactation room with prescribed features and access to a sink and refrigerator (or another cooling device suitable for storing milk) in close proximity to the employee’s workspace.

Develop and distribute to employees a lactation accommodation policy.

Maintain accommodation request records for three years and allow the employee and Labor Commissioner access to the records.

SB 937 would also deem the denial of break time or space for lactation a failure to provide a rest period under Labor Code section 226.7. This bill would require the DLSE to create a model lactation accommodation request form and authorize the DLSE to create a model lactation policy and best practices.

Encouraging Mediation Confidentiality. SB 954 would require attorneys, except in class actions, to provide their mediating clients with a written disclosure containing the mediation confidentiality restrictions provided in the Evidence Code and to obtain a written acknowledgment signed by the client stating that the client has read and understands the confidentiality restrictions. This duty arises as soon as reasonably possible before the client agrees to participate in mediation or a mediation consultation, The bill is an encouragement, with little consequence, providing that an attorney’s failure to comply is not a basis to set aside an agreement prepared in mediation or pursuant to a mediation.

Criminal History. SB 1412—the only bill this year covering criminal background checks to survive the legislative gauntlet—would require employers to consider only a “particular conviction” (as defined by the bill) relevant to the job when screening applicants using a criminal background check.

Pay Statements. Stating it is declaratory of existing law, SB 1252 would amend Labor Code section 226 to provide employees the right “to receive” a copy—not just inspect or copy—their pay statements.

Immigration Documents. AB 2732 would make it a misdemeanor— subject to a $10,000 penalty—for an employer to destroy or withhold passports or other immigration documents. This bill would also require an employer to provide the “Worker’s Bill of Rights” (to be developed by the DIR) to employees either before verifying employment eligibility if hired on or after July 1, 2019 and whenever the document is made available by the DIR if the employee is hired before July 1, 2019. Employers would be required to keep signed copies of this document for at least three years. AB 2732 also would clarify the definition of janitorial services’ employer under the Labor Code, provide that additional contact and compensation information for janitorial workers be retained for three years, and require these employers (as part of their application or renewal of their registration) to attest that sexual violence and harassment prevention training has been provided.

Contractor Liability. AB 1565 would, immediately upon the Governor’s signing, repeal the express provision that relieved direct contractors for liability for anything other than unpaid wages and fringe or other benefit payments or contributions including interest owed.

Port Drayage Motor Carries. SB 1402 would require the DLSE to post a list on its site of “bad actor” port drayage motor carriers. Examples would include companies with any unsatisfied judgment or assessment or any “order, decision, or award” finding illegal conduct as to various wage/hour issues, specifically including independent contractor misclassification and derivative claims. SB 1402 would also extend joint and several liability to the customers of “bad actor” drayage motor carriers for their future wage violations of the same nature.

Stay tuned! We will provide a full update of those bills that were voted and signed into law this Session, as well as which bills failed to meet the Legislature’s or Governor’s approval, after Governor Brown has done his work on the remaining bills.

Seyfarth Synopsis:Several bills of concern to California employers failed to receive the house of origin blessing and passage by the June 1 deadline, including this year’s attempts at PAGA reform, criminal history inquiries, and medical marijuana accommodations, while a boatload of others, most notably sexual harassment-related bills, sail on. The measures being passed to their opposite house for consideration are described below.

Friday, June 1, marked the deadline for the state Senate and Assembly to pass bills introduced in their respective houses to the other house. Several employment-related bills (see links at the end of this post) failed to make it out of the house of origin. Many others, detailed below, continue their onward progress toward possible enactment into law. Most notable in number and publicity are the many pending sexual harassment bills. Here’s what is still alive, that we are watching:

Sexual Harassment

AB 1867 would require employers with 50 or more employees to retain records of all internal employee sexual harassment complaints for ten years, and would allow the Department of Fair Employment and Housing (DFEH) to seek an order compelling non-compliant employers to do so. The bill, which would add Section 12950.5 to the Government Code, is scheduled for hearing in the Senate Labor and Industrial Relations Committee on June 13.

SB 1300 would amend the Fair Employment and Housing Act (FEHA) to require a plaintiff who alleges the employer failed to take all reasonable steps necessary to prevent discrimination and harassment to show: (1) the employer knew the conduct was unwelcome, (2) the conduct would meet the legal standard for harassment or discrimination if it increased in severity or became pervasive, and (3) the employer failed to take all reasonable steps to prevent the same or similar conduct from recurring.

This bill would also (a) prohibit an employer from requiring a release of claims or rights under FEHA, or a nondisclosure agreement or other agreement not to disclose unlawful acts in the workplace, in exchange for a raise or a bonus or as a condition of employment or continued employment, (b) require employers, with five or more employees, to provide two hours of sexual harassment prevention training, including bystander intervention training, within six months of hire and every two years thereafter to all California employees—not just supervisors, and (c) prohibit a prevailing defendant from being awarded fees and costs unless the court finds the action was frivolous, unreasonable, or totally without foundation when brought or that the plaintiff continued to litigate after it clearly became so.

SB 1343, which closely resembles SB 1300, would require employers with five or more employees—including temporary or seasonal employees—to provide at least two hours of sexual harassment training to all employees by 2020 and then once every two years thereafter. SB 1343 would also require the DFEH to develop (or obtain) and publish on its website a two-hour interactive online training course on prevention of sexual harassment in the workplace. The bill would also require the DFEH to make the training course, as well as posters, and fact sheets, available in multiple languages (i.e., English, Spanish, Simplified Chinese, Tagalog, Vietnamese, Korean and any other language spoken by “a substantial number of non-English speaking people”).

AB 3080 would prohibit (1) a person from, as a condition of employment or as a condition of entering into a contractual agreement, prohibiting a job applicant, an employee, or independent contractor from disclosing to any person instances of sexual harassment suffered, witnessed, or discovered in the work place; (2) mandatory arbitration of sexual harassment claims; and (3) retaliation against an applicant or an employee who refuses to sign an arbitration agreement. Governor Brown vetoed AB 465 in 2015, which would have prohibited the use of mandatory arbitration agreements as a condition of employment. In his veto message, Governor Brown said he was “not prepared to take the far-reaching step proposed by this bill” and that this sort of blanket ban on mandatory arbitration “has been consistently struck down in other states as violating the Federal Arbitration Act” (FAA). Supporters of AB 3080 have attempted to “preemptively” address such arguments: Floor Analyses cite the ACLU as citing the California Supreme Court’s 2000 Armendariz decision, as well as Civil Code sections 1668 and 3513, to argue that the FAA does not exempt arbitration clauses from general principles that apply to all contracts, and that contracts attempting to exempt people from fraud or illegal activity are unenforceable and against public policy.

AB 3081 would: (1) extend Labor Code prohibitions on discrimination against employees who are victims of domestic violence, sexual assault, or stalking to include employees who are victims of sexual harassment, as well as employees who take time off to assist a family member who is a victim of domestic violence, sexual assault, sexual harassment or stalking; (2) create a rebuttable presumption of unlawful retaliation against an employee if any adverse job action occurs within 90 days of reporting sexual harassment, participating in an investigation, or similar acts; (3) increase the time an employee has to file a complaint with the DLSE for violation of Labor Code section 230 (provides protected time off for jury duty and victims) from one year to three years; (4) require an employer, at the time of hiring and regularly on an annual basis thereafter, to provide to each employee a written notice that includes prescribed information about sexual harassment; and (5) require an employer with 25 or more employees to provide sexual harassment prevention training to all nonsupervisory employees at the time of hire and once every two years thereafter. The bill would also require the Labor Commissioner to create a means for employees to report sexual harassment or assault that occurs in the workplace.

AB 3082 would require the state Department of Social Services (DSS) to develop a policy addressing sexual harassment of in-home supportive services (IHSS) providers and to provide the Legislature with a summary by September 30, 2019. AB 2872 would require the DSS to adopt a peer-to-peer training course for IHSS providers and to ensure that every authorized provider has received at least two hours of peer-to-peer training by December 31, 2019. Beginning January 1, 2020, the bill would require all new or returning IHSS providers to receive at least two hours of peer-to-peer training within their first year of employment.

SB 1038 would make an employee who intentionally retaliates against a person who has filed a complaint, testified, assisted in any proceeding, or opposed any prohibited practice, under FEHA, jointly and severally liable, regardless of whether the employer knew or should have known of that employee’s retaliatory conduct. Previous versions of this bill would have extended personal liability for retaliation, similarly to the liability that already exists for harassment.

AB 2770 would include as “privileged” communications for: (1) complaints of sexual harassment made without malice by an employee to an employer based upon credible evidence; (2) communications between the employer and “interested persons” made without malice regarding the complaint; and (3) non-malicious statements made to prospective employers as to whether a decision to not rehire would be based on a determination that the former employee had engaged in sexual harassment. The bill is scheduled for hearing in the Senate Committee on Judiciary on June 12.

AB 1870 would extend the time an employee has to file an administrative charge with the DFEH alleging an unlawful practice under the FEHA, including, but not limited to, allegations of a sexual harassment, from one year to three years from the alleged incident.

SB 820, the “Stand Together Against Non-Disclosure” (STAND) Act, would make void as a matter of law and public policy provisions in settlement agreements, entered into on or after January 1, 2019, that prevent the disclosure of factual information related to cases involving sexual assault, sexual harassment, sex discrimination, and failure to prevent sex-based harassment and discrimination. The bill would, however, allow such a confidentiality provision to be included upon the request of the claimant unless the opposing party is a government agency or public official; and would allow a provision requiring the monetary settlement payment be kept confidential. Senator Leyva thanked her colleagues when this bill passed the Senate on May 21: “SB 820 shreds the curtain of secrecy that has forced victims to remain silent and empowers them to speak their truth so that we can hopefully protect other victims moving forward.” SB 820 would build on AB 1682, signed into law in 2016, which prohibits confidentiality provisions in settlement agreements in cases involving child sexual abuse or sexual assault against an elderly or dependent adult.

AB 3109 would make void and unenforceable a provision in a contract or settlement agreement, entered into on or after January 1, 2019 that: either (1) waives a party’s right to testify regarding an alleged criminal conduct or sexual harassment by the other party to the contract or agreement in an administrative, legislative, or judicial proceeding; or (2) substantially restrains a party’s right to seek employment or reemployment in any lawful occupation or industry, unless the other party to the contract or agreement is the current or prior employer (except for public employers and a private employer that “so dominates the labor market” so as to effectively restrict the employee from being able to secure employment). The bill is scheduled to be heard in the Senate Committee on Judiciary on June 17.

SB 224 would extend liability for claims of sexual harassment where a professional relationship exists between a complainant and an elected official, lobbyist, director, or producer. This bill (a two year bill introduced in February 2017) has been held at the Assembly desk since January 23, 2018. AB 2338 would require talent agencies to provide to employees and artists, and the Labor Commissioner to provide minors and their parents (prior to issuing the minor a work permit), training and materials on sexual harassment prevention, retaliation, nutrition, reporting resources, and eating disorders. This bill would authorize the Labor Commissioner to charge up to a $25 fee to train each minor, and to impose a $100 fine each time a talent agency fails to provide training, education, or fails to retain specified records. The bill would require a talent agency to request and retain a copy of the minor’s work permit prior to representing a minor.

AB 2079—the “Janitor Survivor Empowerment Act”—would: (1) prohibit the Division of Industrial Relations (DIR) from approving a janitorial service employer’s registration or a renewal that has not fully satisfied a final judgment for certain unlawful employment practices; (2) require the DIR to convene an advisory committee to develop requirements for qualified organizations and peer trainers that janitorial employers must use to provide sexual harassment prevention training; (3) require the DIR maintain a list of qualified organizations and qualified peer trainers and employers to use a qualified organization from the list; and (4) require employers, upon request, to provide an employee a copy of all training materials. AB 2079 builds upon AB 1978 (2016)—the Property Services Workers Protection Act, effective July 1, 2018—which established requirements to combat wage theft and sexual harassment for the janitorial industry.

AB 1761 would require hotel employers to: (1) provide employees with a free “panic button” to call for help when working alone in a guest room that the employee may use, and allow the employee to cease work, if the employee reasonably believes there is an ongoing crime, harassment, or other emergency happening in the employee’s presence; (2) post a notice on the back of each guestroom door informing guests of the panic buttons entitled, “The Law Protects Hotel Housekeepers and Other Employees from Sexual Assault and Harassment”; and (3) provide an employee subjected to an act of violence, sexual harassment or assault, upon request, with time off to seek assistance from law enforcement, legal or medical assistance, and/or reasonable accommodation. The bill would prohibit employers from taking action against any employee who exercises the protections afforded by this bill, and impose a $100 per day penalty, up to $1,000, for a violation of these proposed provisions.

Pay Equity

SB 1284, as presently drafted, is a less onerous version of last year’s effort to mandate annual reporting of pay data a la EEO-1. The bill would require, on or before September 30, 2019, and each year thereafter, that private employers with 100 or more employees submit a pay data report to the DIR. If enacted, the law would require employers to include in the report the following for each establishment, and a consolidated report for all establishments:

The number of employees by race, ethnicity, and sex in the following categories: all levels of officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers; and

The number of employees by race, ethnicity and sex whose earnings fall within each of the pay bands used by the US Bureau of Labor Statistics Occupation Employment Statistics Survey, determined by each employee’s total earnings for a 12-month look-back period, including total hours worked by each employee for part-time/partial-year employment.

Employers that are required to submit the EEO-1 Report could instead submit that report to the DIR. The DIR would maintain the reports for 10 years and make the report available to the DFEH upon request. Non-compliant employers would be subject to a $500 civil penalty for the initial violation and $5,000 for each subsequent violation as well as citation by the Labor Commissioner. The bill would prohibit the DIR and DFEH from publicizing any individually identifiable information obtained through this process but authorize the DIR or the DFEH to develop and publicize aggregate reports based on the information received that are reasonably calculated to prevent association of any data with any business or person.

This year’s Fair Pay Act bill, AB 2282, attempts to clarify some ambiguities in Labor Code sections 432.3 and 1197.5 created by prior pay equity legislation, AB 1676 (2016) and AB 168 (2017). AB 2282 would clarify that “pay scale” means a “salary or hourly wage range,” that “reasonable request” by an employee for a position’s pay scale means “a request made after an applicant has completed an initial interview with the employer,” and that “applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is currently not employed with that employer in any capacity or position. The bill provides that nothing in section 432.3 prohibits an employer from asking an applicant about his/her salary expectation, and that nothing in section 1197.5 should be interpreted to prohibit an employer from making a compensation decision based on a current employee’s existing salary as long as any wage differential resulting from that compensation decision is justified by one or more of the factors specified in the statute. AB 2282 is scheduled for hearing in the Senate Committee on Labor and Industrial Relations on June 13.

Pay Statements: SB 1252 would amend Labor Code section 226 to grant employees the right “to receive” a copy of (not just inspect) their pay statements. This bill is scheduled for hearing on June 20 in the Assembly Committee on Labor and Employment.

Port Drayage Carriers: SB 1402 would require the DLSE to create and post a list on its website of “bad actor” port drayage motor carriers, i.e., companies with any unsatisfied judgments or assessments, or any “order, decision, or award” finding illegal conduct as to various wage/hour issues, including independent contractor misclassification and derivative claims. This bill would extend joint and severable liability to those companies’ customers for future wage violations of the same nature by those drayage motor carriers. This bill is part of a very broad and multi-pronged attack on port drayage motor carriers serving the LA and Long Beach ports, mainly regarding alleged independent contractor misclassification of drivers.

Lactation Accommodations: AB 1976 would ensure employers’ already-required reasonable efforts to provide a room or location for lactation consists of providing something other than a toilet stall or bathroom (by deleting “toilet stall” and inserting “bathroom” in the statute). This bill is scheduled for hearing in the Senate Committee on Labor and Industrial Relations on June 13. SB 937 would more substantively change existing lactation accommodation requirements, by requiring a lactation room to be safe, clean, and free of toxic or hazardous materials, contain a surface to place a breast pump and personal items, contain a place to sit, and have access to electricity. The bill would exempt employers with fewer than 50 employees that can show that the requirement would impose an undue hardship by causing significant expense or operational difficulty when considered in relation to the employer’s size, financial resources, or structure. SB 937 would allow employers to designate a temporary lactation location, instead of providing a dedicated room, due to operational, financial, or space limitations. SB 937 would require employers to develop and implement a new lactation accommodation policy describing an employee’s right to a lactation accommodation, how to request an accommodation, the employer’s obligation to respond to the request, and the employee’s right to file a complaint with the Labor Commissioner. The bill would also require employers to maintain accommodation request records for three years and to allow the Labor Commissioner access to the records. The bill would require the DLSE to create and make available a model lactation policy and model lactation accommodation request form on the DLSE website, as well as lactation accommodation best practices. The bill would deem a denial of reasonable break time or adequate lactation space a failure to provide a rest period in accordance with Labor Code section 226.7.

Paid Family Leave: 2017 legislation effective January 1, 2018, removed the seven-day waiting period before an eligible employee may receive family temporary disability benefits (under the paid family leave program, which provides wage replacement benefits to workers who take time off work to care for a seriously ill family member or to bond with a minor child within one year of birth or placement). AB 2587 would remove the requirement that up to one week of vacation leave be applied to the waiting period, consistent with the removal of the seven-day waiting period for these benefits. This bill is scheduled for hearing in the Senate Committee on Labor and Industrial Relations on June 13.

Criminal History: SB 1412, the sole criminal history bill of four still alive, would allow employers to inquire into a job applicant’s particular conviction, regardless of whether that conviction has been judicially dismissed or sealed, under these specified conditions: (1) the employer is required by federal law, federal regulation, or state law to obtain information about the particular conviction, (2) the job applicant would carry or use a firearm as part of the employment, (3) the job applicant with that particular conviction would be ineligible to hold the position sought, or (4) the employer is prohibited from hiring an applicant who has that particular conviction.

Mediation Confidentiality: SB 954 would require that, except in the case of a class action, before engaging in a mediation or mediation consultation, an attorney representing a client participating in a mediation or a mediation consultation must provide the client with a written disclosure containing the mediation confidentiality restrictions provided in the Evidence Code. The bill would require the attorney to obtain a written acknowledgment signed by the client stating that the client has read and understands the confidentiality restrictions. However, an agreement prepared during a mediation would remain valid even if an attorney fails to comply with the disclosure requirement. The bill would also add to the mediation privilege of Evidence Code section 1122 any communication, document, or writing that is to be used in an attorney disciplinary proceeding to determine whether an attorney has complied with the above requirements, and does not disclose anything said or done or any admission made in the course of the mediation.

Immigration Status: AB 2732 would make it illegal—and subject to a $10,000 penalty—for an employer to knowingly destroy or withhold any real or purported passport, other immigration document, or government identification, of another person, in the course of committing trafficking, peonage, slavery, involuntary servitude, a coercive labor practice, or to avoid any obligation imposed on the employer by the Labor Code. This bill would require an employer to post a workplace notice stating the rights of an employee to maintain custody of the employee’s own immigration documents, that the withholding of immigration documents by an employer is a crime, and “If your employer or anyone is controlling your movement, documents, or wages, or using direct or implied threats against you or your family, or both, you have the right to call local or federal authorities, or the National Human Trafficking Hotline at 888-373-7888.”. Further, the bill would require an employer to provide employees with the “Worker’s Bill of Rights,” to be developed by the DIR by July 1, 2019, which would inform employees of the same rights. Employers would be required to have employees sign the “Worker’s Bill of Rights” and maintain the records for at least three years.

SB 785, which the Governor signed and went into effect immediately May 17, 2018 (to sunset on January 1, 2020), prohibits the disclosure of an individual’s immigration status in open court in a civil or criminal action unless the party wishing to disclose the information requests a confidential in camera hearing and the judge deems the evidence relevant and admissible.

Bills that failed… for now:

The following bills did not survive the house of origin deadline or were struck down prior to the deadline. See our prior legislative update for summaries of these bills.

Seyfarth Synopsis: California is rife with regulation of how employers may obtain and consider background check information for use in hiring and personnel decisions. The relatively new California ban-the-box law (effective January 1, 2018) and the older Los Angeles and San Francisco ordinances and amendments to the California Labor Code set strict rules on when and how employers can consider criminal and credit histories in employment. Many details to follow.

Before 2014, when San Francisco enacted a city-wide ban-the-box law, criminal history background checks were largely unregulated in California, except for a handful of Labor Code provisions that barred consideration of certain types of criminal records. And California employers were stripped of their ability to use credit checks for hiring and other personnel decisions in 2012, by amendments to the Labor Code that restricted the use of credit checks to very narrow circumstances. Los Angeles and the State of California have now joined San Francisco with their own ban-the-box laws, which markedly differ from San Francisco’s.

This blog highlights the laws concerning criminal and credit history background check reports in California, after briefly discussing the decades-old federal Fair Credit Reporting Act (“FCRA”). As the number of class actions alleging FCRA violations continues to skyrocket, it is critical that California employers understand the basics of all laws affecting employment screening programs and determine what changes to policies, forms, and practices will ensure compliance and reduce the risk of claims.

FCRA Basics

Generally speaking, before an employer may obtain a consumer report (aka a “background check report”)—which may include criminal or credit history, from a third-party background check company (“consumer reporting agency” or “CRA”)—the employer must make a clear and conspicuous written disclosure to the individual, in a document that consists “solely” of the disclosure, that a background check may be done. California’s fair credit reporting statute also requires a separate, stand-alone disclosure, which cannot be combined with the FCRA disclosure. The applicant or employee must provide written consent for the employer to obtain a background check report. There are other requirements for “investigative consumer reports” (those based on interviews of the individual’s friends, neighbors and associates) and employers regulated by the Department of Transportation.

Before an employer relies in whole or in part on a background check report to take an “adverse action” (e.g., rescinding a conditional job offer or discharging an employee), the employer must provide the individual a “pre-adverse action” notice, and include with it a copy of the report and the Consumer Financial Protection Bureau’s Summary of Rights. This notice gives the individual an opportunity to discuss the report with the employer before the employer takes adverse action.

Once the employer is prepared to take the adverse action, it must then give the individual an “adverse action” notice, containing certain FCRA-mandated text.

California employers that rely on criminal and credit history information for employment purposes must also consider state and local laws that impose additional compliance obligations, regardless of whether the information is obtained from a CRA.

Employers May Order “Credit Reports” Only for Certain Positions

As noted, California employers have been hampered in their ability to order credit checks since 2012. Labor Code section 1024.5 states that employers, except for financial institutions, may order a credit check only if the individual works (or is applying to work) in certain positions:

a managerial position (as defined in California Wage Order 4);

a position in the State Department of Justice;

a sworn peace officer or law enforcement position;

a position for which the employer must, by law, consider credit history information;

a position that affords regular access to bank or credit card account information, Social Security numbers, and dates of birth (all three are required), so long as access to this information does not merely involve routine solicitation and processing of credit card applications in a retail establishment;

a position where the individual is or will be a named signatory on the bank or credit card account of the employer or authorized to transfer money or authorized to enter into financial contracts on the employer’s behalf;

a position that affords access to confidential or proprietary information; or

a position that affords regular access during the workday to the employer’s, a customer’s or a client’s cash totaling at least $10,000.

Setting aside state and federal disclosure and authorization requirements discussed above, any California employer that intends to order a credit check on a position identified above must notify the individual in writing why the employer is using a credit report (e.g., the individual is applying for or holds a position that affords access to confidential or proprietary information).

California’s State and Local Ban-the-Box Laws Restrict Use of “Criminal History”

California’s statewide ban-the-box law (Gov’t Code § 12952), as of January 1, 2018, requires employers with five or more employees (subject to few exceptions) to follow certain procedures when requesting and using criminal history information for pre-hire purposes. Specifically, regardless of the source of the criminal history information, employers must:

Wait until after a conditional offer of employment to inquire about criminal history, which means asking applicants directly whether they have been convicted of a crime, ordering a criminal history background check, or making any other inquiry about an applicant’s criminal history.

Conduct an individualized assessment of an applicant’s conviction to determine whether it has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.” Unlike the Los Angeles ban-the-box ordinance (discussed below), the California law does not require employers to provide the applicant with their assessment.

Notify the applicant of any potential adverse action based on the conviction history. The notice must identify the conviction, include a copy of any conviction history report (regardless of the source), and state the deadline for the applicant to provide additional information, such as evidence of inaccuracy, rehabilitation, or other mitigating circumstances.

After waiting the requisite time period, notify the applicant of any final adverse action, of any existing procedure the applicant has to challenge the decision or request reconsideration, and of the applicant’s right to file a complaint with the Department of Fair Employment and Housing.

In contrast to the FCRA pre-adverse and adverse action notices—required only if the adverse decision is based on information obtained from a background check report from a CRA—the California notices are required even if the employer doesn’t order criminal background check reports from a CRA, but learns of the criminal history from a different source (such as an applicant self-disclosure).

Substantively, a wide range of criminal records are off-limits to California employers (unless the employer qualifies for very narrow exceptions identified in the Labor Code). Records that cannot be used are:

arrests that did not lead to a conviction;

non-felony marijuana convictions that are older than two years;

juvenile records; and

diversions and deferrals.

Although complying with California law can be challenging, employers that hire in the cities of Los Angeles and San Francisco must also look to the ban-the-box ordinances in these jurisdictions, which exceed the requirements found in the FCRA and the California ban-the-box law.

The Los Angeles Fair Chance Initiative for Hiring Ordinance

The Los Angeles ordinance, effective January 22, 2017, applies to any “employer” located or doing business in the City of Los Angeles and employs 10 or more employees. An employee is any person who performs at least two hours of work on average each week in the City of Los Angeles and who is covered by California’s minimum wage law. The ordinance also applies to job placement and referral agencies and is broad enough to cover other types of work, including temporary and seasonal workers and independent contractors.

The L.A. ordinance goes beyond California-imposed requirements by imposing the following onerous steps on employers when considering criminal history (regardless of the source):

Perform a written assessment that “effectively links the specific aspects of the Applicant’s Criminal History with risks inherent in the duties of the Employment position sought by the Applicant.” The assessment form that contains the relevant factors can be found on the city’s website.

Provide the applicant a “Fair Chance Process”—giving the applicant an opportunity to provide information or documentation the employer should consider before making a final decision, including evidence that the criminal record is inaccurate, or evidence of rehabilitation or other mitigating factors. As part of this process, the employer must include with the pre-adverse action notice a copy of the written assessment and any other information supporting the employer’s proposed adverse action.

Wait at least five business days to take adverse action or fill the position. If the applicant provides additional information or documentation, the employer must consider the new information and perform a written reassessment, which is at the bottom of the form mentioned above. If the employer still decides to take adverse action against the applicant, the employer must notify the candidate and attach a copy of the reassessment with the adverse action notice.

Los Angeles also states that all solicitations and advertisements for Los Angeles opportunities must state that the employer will consider qualified candidates with criminal histories in a manner consistent with the law.

Moreover, employers must post, in a conspicuous workplace that applicants visit, a notice that informs candidates of the Los Angeles ordinance. Copies of the notice must be sent to each labor union or representative of workers that has a collective bargaining agreement or other agreement applicable to employees in Los Angeles. This notice can be found on the City’s website.

San Francisco’s Fair Chance Ordinance

San Francisco, as of August 13, 2014, became California’s first city to enact a ban-the-box law. Because the new California ban-the-box law provided greater protections to job applicants, the City and County of San Francisco Board of Supervisors (on April 3, 2018) amended the Fair Chance Ordinance (Article 49) to align (in some respects) with the California law. However, employers with five or more employees working in San Francisco that intend to inquire about and consider criminal history (regardless of the source) also must:

Provide the applicant or employee with a copy of the Office of Labor Standards Enforcement’s (“OLSE”) Fair Chance Act Notice before inquiring about criminal history or ordering a criminal history background check.

Post the OLSE Notice “in a conspicuous place at every workplace, job site, or other location in San Francisco under the Employer’s control frequently visited by their employees or applicants,” and “send a copy of this notice to each labor union or representative of workers with which they have a collective bargaining agreement or other agreement or understanding, that is applicable to employees in San Francisco.” The posted Notice must be in English, Spanish, Chinese, and any language spoken by at least 5% of the employees at the workplace, job site, or other location at which it is posted. The Notice currently is on the OLSE’s website.

Covered San Francisco employers are barred from considering the following types of criminal records (even though these records are not off-limits in other California cities), subject to narrow exceptions: (i) infractions; (ii) convictions that are older than seven years (measured from the date of sentencing); and (iii) any conviction that arises out of conduct that has been decriminalized since the date of the conviction, measured from the date of sentencing (which would include convictions for certain marijuana and cannabis offenses).

California Workplace Solutions

Class actions against employers for failing to follow hyper-technical requirements for background checks have come to dominate the news. Employers in California and elsewhere will want to conduct (privileged) assessments to strengthen their compliance with the myriad laws that regulate use of an individual’s criminal and credit history. Suggested next steps include:

Assess coverage under the California, Los Angeles, and San Francisco ban-the-box laws, and California’s law restricting use of credit reports.

Review job advertisements and postings both for unlawful and mandatory language regarding criminal history.

Train employees who conduct job interviews and make or influence hiring and personnel decisions, regarding inquiries into, and uses of, credit and criminal history, including best practices for documentation and record retention.

Review the hiring process to ensure compliance, including the timing of criminal history background checks, the distribution of mandatory notices, and the application of necessary waiting periods.

Seyfarth Synopsis: Dominating this spring’s planting of proposed employment-related legislation are bills aimed at ending sexual harassment and promoting gender equity. Among the secondary crops are bills regarding accommodation, leave, criminal history, and wage and hour law. It threatens to be another bitter fall harvest for California’s employer community.

California legislators stormed into the second half of the 2017-18 legislative session, introducing over 2,000 bills by the February 16 bill introduction deadline. With Spring upon us, one must ponder what L&E-related bills planted thus far will grow into by the time of the legislative harvest this fall. By that time some will have died on the vine in the summer heat, and some, fully ripened, will go to the Governor. Will the Governor, among the closing acts of his term, approve or reject them?

Meanwhile, the newly planted bills will get a week to rest as legislators head for Spring Break today, March 22. The Legislature reconvenes on April 2 for committee hearings and amendments. June 1 is the deadline for legislation to pass out of its house of origin. Stay tuned for more in-depth analyses of the proposed bills as the session continues.

Sexual Harassment

No fewer than ten bills address the issue of sexual harassment. Some are merely spot bills, while others are more developed. Because you all have day jobs, we have read the bills so you won’t have to. A brief summary of each follows. Contact us if you want to know more. Or even just to vent.

AB 1867 would require employers with 50 or more employees to retain records of all internal employee sexual harassment complaints for ten years, and would allow the Department of Fair Employment and Housing (DFEH) to seek an order compelling non-compliant employers to do so.

SB 1300 would amend the Fair Employment and Housing Act (FEHA) to (1) absolve a plaintiff who alleges that his/her employer failed to take all reasonable steps necessary to prevent discrimination and harassment from occurring from proving that sexual harassment or discrimination actually occurred, (2) prohibit release of claims under FEHA in exchange for a raise or a bonus or as a condition of employment or continued employment, and (3) require employers, regardless of size, to provide two hours of sexual harassment prevention training within 6 months of hire and every two years thereafter to all employees—not just supervisors.

SB 1343, which closely resembles SB 1300, would require employers with five or more employees to provide at least two hours of sexual harassment training to all employees by 2020 and then once every two years thereafter. SB 1343 would also require the DFEH to produce and publish a two-hour video training course that employers may utilize.

SB 224 would extend liability for claims of sexual harassment where a professional relationship exists between a complainant and an elected official, lobbyist, director, or producer. AB 2338 would require talent agencies to provide to employees and artists, and the Labor Commissioner to provide minors and their parents, training and materials on sexual harassment prevention, retaliation, nutrition, reporting resources, and eating disorders.

Assembly Member Gonzalez-Fletcher introduced a package of spot bills (to which substance will later be added) targeting “forced arbitration agreements” and increasing protections for sexual harassment victims. AB 3080 would prohibit (1) requiring employees to agree to mandatory arbitration of any future claims related to sexual harassment, sexual harassment, or sexual assault as a condition of employment and (2) non-disclosure provisions in any settlement agreement. AB 3081 would create a presumption that an employee has been retaliated against if any adverse job action occurs against that employee within 90 days of making a sexual harassment claim, and would extend current sexual harassment training requirements to employers with 25 or more employees. AB 3082 would create a statewide protocol for public agencies to follow when In Home Support Service (IHSS) workers encounter harassment and sexual harassment prevention training for IHSS workers and clients. AB 2079—soon to be named the “Janitor Survivor Empowerment Act”—would enact specific harassment training rules for the janitorial service industry. AB 2079 builds upon AB 1978—the Property Services Workers Protection Act, effective July 1, 2018—which established requirements to combat wage theft and sexual harassment for the janitorial industry.

AB 1761 would require hotels to (1) provide employees with a free “panic button” to call for help when working alone in a guest room, (2) maintain a list of all guests accused of violence or sexual harassment for five years from the date of the accusation and decline service for three years to any guest on that list when the accusation is supported by a sworn statement, and (3) post on the back of each guestroom door a statement that the law protects hotel employees from violent assault and sexual harassment.

SB 1038 would impose personal liability under FEHA on an employee who retaliates by terminating or otherwise discriminating against a person who has filed a complaint or opposed any prohibited practice, regardless of whether the employer knew or should have known of that employee’s conduct. (Personal liability already exists for harassment, but not for retaliation.)

AB 2366 would extend existing law, which already protects employees who take time off work related to their being a victim of domestic violence, sexual assault, and stalking. AB 2366 would also protect employees who take time off because an immediate family member has been such a victim. AB 2366 would also add sexual harassment to the list of reasons for which this protection applies.

AB 2770 addresses the apprehension that harassment complaints and employer responses might trigger defamation suits. AB 2770 creates a “privilege” for complaints of sexual harassment by an employee to an employer based upon credible evidence, for subsequent communications by the employer to “interested persons” and witnesses during an investigation, for statements made to prospective employers as to whether an employee would be rehired, and for determinations that the former employee had engaged in sexual harassment. The California Chamber of Commerce has sponsored this bill.

AB 1870 would extend the time an employee has to file a DFEH administrative claim (including, but not limited to, a sexual harassment claim). The current deadline is one year from the alleged incident. AB 1870 would make it three years! In a similar bill, AB 2946 would extend the time to file a complaint with the DLSE from six months to three years from the date of the violation. This bill would also amend California’s whistleblower provision to authorize a court to award reasonable attorney’s fees to a prevailing plaintiff.

AB 1938 would limit employer inquiries about familial status during the hiring or promotional process. AB 1938 would make it unlawful to make any non-job related inquiry about an individual’s real or perceived responsibility to care for family members.

SB 820, the “Stand Together Against Non-Disclosure” (STAND) Act, would prohibit provisions in settlement agreements entered into on or after January 1, 2019 that require the facts of the case to be kept confidential, except where the claimant requested the provision, in cases involving sexual assault, sexual harassment, and sex discrimination. SB 820 would allow settlement amounts to be kept private. The bill is sponsored by the Consumer Attorneys of California and the California Women’s Law Center.

AB 3109 would void any contract or settlement agreement entered into on or after January 1, 2019 that waives a party’s free speech and petition rights, meaning one that would limit a party’s ability to make any written or oral statement before or in connection with an issue before a legislative, executive, or judicial proceeding, or make any written or oral statement in a place open to the public or a public forum in connection with an issue of public interest. The bill would also prohibit contracts or settlement agreements that restrict a party’s rights to seek employment or reemployment in any lawful occupation or industry.

Pay Equity

SB 1284 is another effort to mandate annual reporting of pay data. It follows last year’s vetoed AB 2019 attempt at a pay data report, though it more closely resembles last year’s failed revised federal EEO-1 report. SB 1284 would require employers with 100 or more employees to report pay data to the Department of Industrial Relations on or before September 30, 2019 and on or before September 30 each year thereafter. The report is to include the number of employees by race, ethnicity, and sex; all levels of officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers; and each employee’s total earnings for a 12-month period. Non-compliant employers would be subject to a $500 civil penalty. In contrast, last year’s AB 1209 would have required California employers with 500 or more employees to gather information on pay differences between male and female exempt employees and male and female board members and report the information annually to the Secretary of State for publishing (i.e., public shaming).

Wage/Hour

Pay Statements: SB 1252 would grant employees the right “to receive” a copy (not just inspect) their pay statements. AB 2223 would provide employers the option to provide itemized pay statements on a monthly basis in addition to the currently required semi-monthly basis or at the time wages are paid. Conversely, AB 2613 would impose penalties of $100 for each initial violation plus $100 for each subsequent calendar day, up to seven days, and more than double for subsequent violations, payable to the affected employees, on employers who violate Labor Code provisions requiring payment of wages twice per month on designated paydays, and once per month for exempt employees.

Flexible Work Schedules: AB 2482 would allow non-exempt employees working for private employers and not subject to collective bargaining agreements to request a flexible work schedule to work ten hours per day within a 40-hour workweek without overtime for the 9th and 10th hours, as long as the employee does not work more than 40 hours in the workweek.

Contractor Liability:AB 1565 is an urgency statute that would take effect immediately upon receiving the Governor’s signature. AB 1565 would repeal the express provision that relieved direct contractors for liability for anything other than unpaid wages and fringe or other benefit payments or contributions including interest owed. The law currently extends liability in construction contracts for any debt owed for labor to a wage claimant incurred by any subcontractor acting under, by, or for the direct contractor or the owner.

PAGA:AB 2016 would require that the employee’s required written PAGA notice to the employer include a more in-depth statement of facts, legal contentions, and authorities supporting each allegation, and include an estimate of the number of current and former employees against whom the alleged violations were committed and on whose behalf relief is sought. AB 2016 would also prescribe specified notice procedures if the employee or employee representative seeks relief on behalf of ten or more employees. The bill would exclude health and safety violations from PAGA’s right-to-cure provisions, increase the time the employer has to cure violations from 33 to 65 calendar days, and provide an employee may be awarded civil penalties based only on a violation actually suffered by the employee. (In sum, a valiant effort to provide employers with some modicum of due process in PAGA case, but it doesn’t stand a chance.)

Accommodations

Lactation: AB 1976 would clarify existing law so that employers must make reasonable efforts to provide a room or location for lactation, other than a bathroom. This bill cleared its first hurdle—the Assembly Labor and Employment Committee—by receiving unanimous approval on March 14. SB 937 would require even more: a lactation room must be safe, clean, and free of toxic or hazardous materials, must contain a surface to place a breast pump and personal items, must contain a place to sit, and must have access to electricity. SB 937 would also require employers to develop and implement a new lactation accommodation policy. The policy must describe an employee’s right to a lactation accommodation, how to request an accommodation, the employer’s obligation to provide accommodation, and the employee’s right to file a request with the Labor Commissioner. Employers would be required to respond to an employee’s accommodation request within five days and provide a written response if the request is denied, and maintain accommodation request records for three years. SB 937 would make employers with fewer than five employees eligible for an undue hardship exemption from the room or location requirement. The bill would also charge the DLSE with the responsibility of creating a model lactation policy and request form and making it available to employers on the DLSE website.

Marijuana: About a dozen states now protect medical cannabis users from employment discrimination. California, meanwhile, has permitted employers to enforce policies against the use of cannabis, which remains illegal under federal law. AB 2069 would change that. AB 2069 would prohibit employers from refusing to hire, taking adverse action against, or terminating an employee based on testing positive for cannabis if the employee is a qualified patient with an identification card or their status as one. The bill would permit employers to take corrective action against an employee who is impaired while on the job or on the premises, and would not apply to employers who would lose a monetary or licensing benefit under federal law if they hired or retained such an employee.

Sick & Other Leaves

AB 2841 would increase an employer’s alternate sick leave accrual method from 24 hours by the 120th calendar day of employment to 40 hours (or 5 days) of accrued sick leave or paid time off by the 200th calendar day of employment. But an employee’s total sick leave accrual would not need to exceed 80 hours (or 10 days). An employer would be able to limit the amount sick leave carried over to the following year to 40 hours or 5 days. This increase would apply to IHSS providers beginning January 1, 2026.

AB 2587 would remove an employer’s ability to require an employee to take up to two weeks of earned but unused vacation before the employee receives family temporary disability insurance benefits under the paid family leave program to care for a seriously ill family member or to bond with a minor child within one year of birth or placement during any 12-month period the employee is eligible for these benefits.

Criminal History

Following the state-wide Ban-the-Box law that went into effect on January 1, 2018, AB 2680 would require the California Department of Justice (DOJ) to create a standard consent form that employers must use when requesting that a job applicant consent to a DOJ criminal conviction history background check. Meanwhile, the “Increasing Access to Employment Act,” SB 1298, would limit the criminal history information the DOJ will provide employers to recent misdemeanors and felonies (within five years), and other offenses for which registration as a sex offender is required. The bill would also prohibit the disclosure of any convictions that have been dismissed, exonerations, or arrests that have been sealed.

SB 1412 would allow employers to inquire into a job applicant’s particular conviction, regardless of whether that conviction has been judicially dismissed or sealed, under these specified conditions: (1) the employer is required by state or federal law to obtain information about the particular conviction, (2) the job applicant would carry or use a firearm as part of the employment, (3) the job applicant with that particular conviction would be ineligible to hold the position sought, or (4) the employer is prohibited from hiring an applicant who has that particular conviction.

AB 2647 would prohibit evidence of a current or former employee’s criminal history from being admitted, under specified circumstances, in a civil action based on the current or former employee’s conduct against an employer, an employer’s agents, or an employer’s employees.

In a category all its own, yet still notable:

SB 954 would require an attorney representing a party in mediation to inform the client of the confidentiality restrictions related to mediation and obtain informed written consent that the client understands these restrictions before the client participates in the mediation or mediation consultation.

Workplace Solutions.

Don’t fret yet! Spring has only just sprung, and these bills all have a lot of growing to do (with some pruning for improvement?). Stay tuned … . We’re keeping our eyes and ears glued on the Capitol.

Seyfarth Synopsis:The Fair Employment and Housing Council issues regulations to implement California’s employment and housing anti-discrimination laws, including the FEHA, the CFRA, and the Unruh and Ralph Civil Rights Acts. The FEHC also conducts inquiries and holds hearings on various civil rights issues. The latest FEHC meeting was held on December 11, 2017. Our own correspondent was there, and files this report of coming regulatory attractions in the areas of age discrimination, religious creed discrimination, and national origin discrimination.

Age Discrimination. The Council discussed the current working draft of 2 C.C.R. § 11076, on age discrimination. The proposed changes would add language defining how to establish a presumption of discrimination by showing disparate treatment of applicants or employees over the age of 40, unless the treatment was tied to a legitimate overriding business necessity, necessary to the safe and efficient operation of the business. An employer would have to show a legitimate overriding business necessity, as opposed to the current “legitimate business reason” for any disparate treatment. The proposed regulations further note: “the mere preference of retaining lower paid workers alone is insufficient to negate a presumption of discrimination.”

This language has not yet been adopted and members of the Council seemed amenable to re-working the language for clarity. The Council members also decided that more research about other jurisdictions’ approaches to regulating workplace age discrimination would be good. This draft is likely to benefit from further revision.

Religious Creed Discrimination. As to a new potential draft of regulations related to religious creed discrimination, the Council heard concerns about pre-employment religious inquiries, such as religious scheduling needs. One commenter suggested that the religious accommodation process be drafted to mirror the interactive process used in disability discussions, suggesting that employers ask prospective employees whether they could perform the essential job functions, with or without a religious accommodation.

The Council did not seem particularly interested in this type of language. Some voiced concerns with the timing of such requests, and whether they might have the deleterious effect of actually weeding out potential employees by flagging them as “religious.” Stay tuned for more comment and revision to these proposed regs.

National Origin Discrimination. As to the final version of new national origin discrimination regulations, notable public comments concerned a section addressing language usage in the workplace. Some commenters feared that a per se ban on language restrictions in the workplace, unless justified by business necessity, could raise safety concerns. For example, during an emergency, employees speaking only in a foreign language on their meal break could present a safety problem if all employees could not understand what was going on. The Council did not seem entirely persuaded by the commenter’s arguments, but the discussion did prompt recognition that overly restrictive language regulation may present problems.

Instead of adopting or approving the regulations as proposed, a contested vote among Council members ensued. Two members voted to adopt the regulation as is, while the rest voted for a renewed notice period and another round of public comments. Overall, there was some lingering hesitation on how this new regulation may affect employers.

Regs Re: Criminal History, the California Family Rights Act, and the New Parent Leave Act. Modifications considered by the FEHC included changing the gender pronouns to be gender neutral, and changing language to reflect the exact language of the CFRA and the NPLA. The council voted to move and adopt these proposed amendments for a public comment period, catapulting them towards final adoption.

Other Happenings

Gender Neutral Signage. The Council also discussed emergency regulations already in place regarding gender-neutral facility signage. A subcommittee had already met with Cal/OSHA to discuss regulatory language to harmonize the regulations under the occupational safety laws, the FEHA, and the new legislation regarding gender neutral bathrooms for single occupancy restrooms. The Council is working with Cal/OSHA to ensure consistency and enforcement.

These new proposed regulations follow hard on the heels of regulations promulgated effective July 1, 2017, concerning Transgender Identity and Expression, and Consideration of Criminal History in Employment Decisions.

We will keep you apprised of further FEHC activity on the new proposals. The next FEHC meeting is scheduled for April 4, 2018. For advice on how these regulations may affect your business, or if you would like to discuss how you can participate with us in making public comments, please reach out to your favorite Seyfarth attorney.

Seyfarth Synopsis: Pay equity and Ban The Box bills lead the list of bills approved to continue their quest (moving to the other house of the California Legislature) to become California law.

Friday, June 2, marked the last day for bills in the California Legislature to pass out of their house of origin—the Senate or Assembly—and continue the legislative process for a shot at becoming a new California Peculiarity. Pay equity and Ban The Box bills lead the list of bills approved to continue moving through the process. Meanwhile, some other feared bills, including the Opportunity to Work Act and retail holiday overtime, did not make the cut. But the substance of these bills, like zombies, may refuse to die and re-emerge through amendment to bills that are still alive. We’ll keep watching, and keep you updated, through the September 15 deadline for bills to pass from the Legislature to the Governor’s desk.

Still Alive:

Pay Equity: Salary Inquiry Ban.AB 168 would prohibit employers, including state and local governments (even the Legislature) from asking applicants about their salary history information, including compensation and benefits. The bill would also require private employers to provide the applicant with the position’s pay scale upon a reasonable request. Will the third time be the charm for this legislation? AB 168 is scheduled for hearing June 14 in the Senate Committee on Labor and Industrial Relations.

Pay Equity: Gender Pay Gap Transparency Act. Attempting a California version of the revised EEO-1 report, AB 1209, effective July 1, 2020, would require employers with 250 or more employees to collect specified data on gender pay differentials, to publish the data on their websites, and to submit the data annually in reporting to the Secretary of State. The required data would include the difference between the mean salary and median salary of male exempt employees and female exempt employees, by job classification or title, and the difference between the mean compensation and median compensation of male board members and female board members. Committee analyses note that this bill was modeled after the recent measure passed in the United Kingdom that requires employers with 250 or more employees to publish their gender pay figures by April 2018.

Applicants: Prior Criminal History.On the heels of Los Angeles’s adoption of “Ban-the-Box,” this year’s attempt at even stronger, state-wide “Ban the Box” legislation marches on. AB 1008 would make it unlawful under California’s Fair Employment and Housing Act (“FEHA”) for an employer to include on any employment application any question seeking disclosure of an applicant’s criminal history, to inquire into or consider the conviction history of an applicant before extending a conditional offer of employment, or to consider or distribute specified criminal history information in conducting a conviction history background check. The bill would require an employer that intends to deny a position solely or in part because of the applicant’s prior conviction to assess whether the applicant’s conviction history has a direct and adverse relationship with the specific job duties. Then, the employer must notify the applicant of the reasons for the decision, provide the applicant time to respond, and consider the response before making a final written employment decision. Exempted from the bill’s scope are criminal justice agencies, farm labor contractors, and positions for which the law requires a state or local agency to conduct a background check or precludes employment based on criminal history.

Voluntary Veterans’ Preference Employment Policy Act. AB 353 would allow private employers to establish a veterans’ preference policy and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. This preference would not violate the FEHA or any other local or state equal opportunity employment law or regulation (provided that the policy is not applied for the purpose of discrimination on the basis of any protected classification).

Credit and Debit Card Gratuities. AB 1099 would require entities that allow debit or credit card payment for services to also accept gratuities or tips via debit or credit card, and to pay those gratuities to the worker no later than the next regular payday. Prior to amendments, the bill would have applied to specified employers (lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies). As amended, rather than specifying the industries to which it applies, AB 1099 defines “entity” as “an organization that uses an online-enabled application or platform to connect workers with customers … including, but not limited to, a transportation network company.” The author’s stated reason for the bill is to make it easier and more reliable for workers in the gig economy to receive tips. The Assembly Appropriations Committee estimates the bill would cost approximately $300,000 in annual enforcement by the Department of Labor Standards Enforcement (“DLSE”), an estimate that could earn this bill the Governor’s veto.

Overtime Compensation: Executive, Administrative, or Professional Employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee who earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher. The bill states the Legislature does not intend to change the “duties test” of the overtime exemptions established in orders of the Industrial Welfare Commission for executive, administrative, or professional employees; those provisions would continue to apply. The bill’s proponents argue that it would create “important protection for middle class workers who fall into the gap between the state’s overtime pay protections and what would have been higher overtime protections afforded” by federal Fair Labor Standards Act regulations adopted by President Obama’s US Department of Labor but enjoined through a court challenge. Opponents argue the bill unnecessarily accelerates salary increases for California exempt employees and applies to all employers regardless of size.

Immigration: Worksite Enforcement Actions.AB 450, the proposed “Immigrant Worker Protection Act,” would prohibit an employer from allowing federal immigration agency worksite enforcement authorities warrantless access to nonpublic areas of a place of labor and from releasing employee records to those federal authorities without a subpoena. This bill would also require an employer to notify the Labor Commissioner and employee representative of an Immigration and Customs Enforcement I-9 Employment Eligibility Verification audit within 24 hours of receiving the inspection notice and provide a copy of the notice. The bill would prescribe penalties, recoverable by the Labor Commissioner against employers for failing to satisfy the bill’s requirements and prohibitions, of not less than $2,000-$5,000 for the first violation and $5,000-$10,000 for each subsequent violation.

Good Faith Defense: Employment Violations.SB 524 would permit an employer to raise an affirmative defense that, at the time of an alleged violation of statute or regulation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. Even though SB 524 failed to pass the Senate Committee on Labor and Industrial Relations, reconsideration was granted and this bill is heading to the Assembly.

Retaliation: Expanding The Labor Commissioner’s Authority. A former placeholder bill, as amended, SB 306 would authorize the Labor Commissioner, upon finding reasonable cause to believe an employer discharged or discriminated against an employee in violation of Labor Code section 98.7—before issuing a final determination—to seek temporary and permanent injunctive relief. This bill also would allow the Labor Commissioner to recover attorney’s fees and costs on a successful enforcement action, would authorize the Labor Commissioner to cite and penalize a person it determines violated Section 98.7, and would create procedural requirements for these processes.

Reproductive Health. AB 569 would add a provision to the Labor Code that would prohibit employers from taking any adverse employment action against an employee based on the employee’s or an employee dependent’s reproductive health decisions, methods, or use of a particular drug, device, or medical service (e.g., in vitro fertilization), including the timing of such. This bill would also prohibit employers from requiring employees to sign a code of conduct or similar document denying an employee the right to make such decisions. This bill would also require employers to include a notice of the employee rights and remedies in its handbook. This bill is aimed at religiously affiliated institutions, noting (in language that would not be codified) the Legislature’s agreement with Justice Alito in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC (2012) 565 U.S. 171, 199, that “the ministerial exception should apply only to an ‘employee who leads a religious organization, conducts worship services or important religious ceremonies or rituals, or serves as a messenger or teacher of its faith.’”

New Parent Leave Act. SB 63, as its predecessor (the vetoed SB 654 of 2016) attempted, would prohibit larger employers (having at least 20 employees within 75 miles) from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement as long as the employee has at least 1,250 hours of service with the employer during the previous 12-month period. This bill would also require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave and allow—although not require—an employer to grant simultaneous leave to two employees entitled to leave for the same birth, adoption, or foster care placement.

Employee Request: Injury and Illness Prevention Program.AB 978 would require an employer to provide an employee or the employee’s representative a copy of the employer’s injury prevention program, free of charge, within 10 business days after the employer receives a written request. Under this bill, a recognized collective bargaining agent would automatically be treated as an authorized employee representative. The employer would be able to assert an impossibility of performance affirmative defense.

Bills Stuck in the House of Origin:

Opportunity to Work Act. More expansive than the City of San Jose’s voter-approved Opportunity to Work Ordinance, the much-publicized and employer-feared AB 5 would have required employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer could hire additional employees or temporary employees. AB 5’s hearing in Assembly Appropriations was postponed by the committee on May 3. Read more on what AB 5 would have implemented here, here, and watch here.

Rest Breaks. AB 817 would have carved out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. AB 817 stalled in the Assembly Committee on Labor and Employment as the bill’s author, Assembly Member Flora, canceled the hearing.

Retail Employees: Holiday Overtime. AB 1173 would have established an overtime exemption that would have allowed an employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would have been paid at double time. This bill never even received a definition to fill in its “retail industry” blank, and was sent to but never heard in the Assembly Committee on Labor and Employment.

Voluntary Veterans’ Preference Employment Policy Act. Feeling déjà vu? AB 1477, almost identical to AB 353, detailed above, would have allowed private employers to establish a veterans’ preference policy and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. This bill remained stagnant in the Assembly Committee on Veterans Affairs and Labor and Employment.

Health Professional Interns: Minimum Wage. AB 387 would have expanded the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. AB 387 was amended to only include work experience longer than 100 hours before Assembly Member Thurmond ordered it to the inactive file on June 1.

Resident Apartment Manager Wages.AB 543 would have authorized an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value, instead of the two-thirds provided by existing law, of the apartment to meet minimum wage obligations to the apartment manager, pursuant to a voluntary agreement. This bill’s hearing in the Assembly Committee of Labor and Employment was canceled at the author’s request.

Labor Organizations: Compulsory Fee Payments.AB 1174 would have prohibited a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization. This bill failed to pass the Assembly Committee on Labor and Employment.

Employer Liability: Small Business and Microbusiness. AB 442 would have prohibited Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with small businesses or microbusinesses without first giving the employer written notice of the violation and providing 30 days to cure. The bill would have authorized Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement. The bill’s hearing in the Assembly Committee on Labor and Employment was canceled at the request of the author.

PAGA: Three Valiant, But Failed, Efforts.

AB 281 attempted to reform PAGA by (1) requiring an actual injury for an aggrieved employee to be awarded civil penalties, (2) excluding health and safety violations from the employer right to cure provisions, and (3) increasing employers’ cure period to 65 calendar days, up from 33.

AB 1429 would have limited the violations an aggrieved employee can bring, required the employee to follow specific procedural prerequisites to filing suit, limited civil penalties recoverable to $10,000 per claimant and excluded the recovery of filing fees, and required the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would have required the Labor and Workforce Development Agency (“LWDA”) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of the proposed PAGA amendments here.

All three PAGA reform attempts stalled in the Assembly Committee on Labor and Employment.

Workplace Solutions

We will keep you apprised of these continuing Peculiarities, as well as any other significant legislative developments that occur as the end of the 2017 Legislative Session draws near. Contact your favorite Seyfarth attorney with any questions.

Seyfarth Synopsis: Back from Spring Break, and Back to Work: Our List of L&E Bills to Watch in the remainder of the 2017-2018 California Legislative Session.

California Legislators were, as always, very busy in the first few months of the 2017-18 Legislative Session, introducing well over 2000 bills by the February 17th bill introduction deadline. But, in comparison to prior years, the calendar has been surprisingly light for heavy-hitter labor and employment bills. The Legislature returned to work on April 17, after its spring break, and continued to push bills out of the house of origin in advance of the June 2nd deadline.

Here’s what we’re watching:

Opportunity to Work Act. Modeled after the City of San Jose’s November 2016 voter-approved Opportunity to Work Ordinance (effective April 1, 2017), AB 5 would require employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer may hire additional employees or temporary employees. The employer would not have to offer the hours to existing employees if those hours would result in the payment of overtime compensation to those employees. The bill would require employers to retain documents, including work schedules of all employees and documentation of offering additional hours to existing employees, prior to hiring new employees or subcontractors. The bill would also require employers to post a notice to be created by the Division of Labor Standards Enforcement (DLSE) outlining employee rights under this (proposed) new law. This Act would create a new Labor Code section, and provide for enforcement by the DLSE on its own accord or via complaint by an employee, or via employee private right of action. The Act would allow for an express CBA carve-out. The bill is scheduled for its initial hearing in the Assembly Committee on Labor and Employment on April 19. Stay tuned for an update on this bill following the hearing.

Rest Breaks. AB 817 would carve out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. The bill expressly states that it is declaratory of existing law. Likely in response to the California Supreme Court’s December 22, 2016 ruling in Augustus v. ABM Security Services, Inc. (holding that no true rest break was permitted when security guards were required to carry radios or pagers and respond to calls during rest breaks), this bill is one to watch.

Retail employees: Holiday Overtime. AB 1173 would establish an overtime exemption for “a holiday season employee-selected flexible work schedule,” requested in writing by individual nonexempt retail employees and approved by the employer. The exemption would allow the employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would be paid at double time. This bill contains a CBA carve-out, and clearly has many details to still be ironed out, as it contains a blank in the bill text for the definition of “retail industry.”

Pay Equity: salary inquiry ban. Once again, AB 168 seeks to ban employers, including state and local government employers, from asking job applicants about their salary history, as well as compensation and benefit information. The bill would also require that private employers, upon reasonable request, provide the applicant with the position’s pay scale. AB 168 brings back language that was shot down twice—first by Governor Brown in his October 2015 veto of AB 1017, then removed from 2016’s AB 1676 (fair pay legislation) before it received the Governor’s approval in September 2016.

Pay Equity: Gender Pay Gap Transparency Act. Dubbed the “Gender Pay Gap Transparency Act,” by author Assembly Member Gonzalez-Fletcher in her April 4, 2017 Equal Pay Day press release, AB 1209 would “require companies with more than 250 employees to include gender pay data as part of their annual reporting to the Secretary of State.” If passed, AB 1209 would require employers, beginning July 1, 2020, to publish and update yearly the difference between the mean salary and median salary of male exempt employees and female exempt employees broken down by job classification or title and the difference between the mean compensation and median compensation for male board members and female board members. Arguments against this bill will likely mirror those made in response to the EEOC’s revised EEO-1 rule.

Voluntary Veterans’ Preference Employment Policy Act. Dubbed the “Voluntary Veterans’ Preference Employment Policy Act,” AB 353 and AB 1477 would allow private employers to establish a veterans’ preference policy and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. These bills would expand Government code section 12940(a)(4), which currently allows for a veterans’ preference policy for Vietnam-era veterans only. The bill would provide that the granting of a veterans’ preference will not violate any local or state equal employment opportunity law or regulation, including FEHA, as long as the policy is not applied for the purpose of discriminating against an employment applicant on the basis of any protected classification.

Applicants: prior criminal history. The Legislature is joining the flurry of “Ban-the-Box” initiatives throughout California with AB 1008, which would make it unlawful for an employer to: 1) include on any job application questions that seek the disclosure of an applicant’s criminal history; 2) inquire or consider an applicant’s prior convictions before extending a conditional offer; and 3) when conducting a background check, to consider or disclose various information. The bill would also require employers that intend to deny employment to an applicant because of prior convictions to perform an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship to the specific job duties, considering the nature and gravity of the offense, the time passed since the completion of the sentence, and the nature of the job. Then, the employer must notify the applicant of the reasons for the decision and provide the applicant 10 days to respond and challenge the accuracy of that information or provide evidence of rehabilitation which it must consider before making a final employment decision, in writing. This bill is substantially similar to the recent Fair Employment and Housing Council regulations, which go into effect in July 2017; and would thus largely codify what will soon be required by regulation.

Health professional interns: minimum wage. Following the recent increases in minimum wage, AB 387 would expand the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. Cal Chamber opposes this bill, as it could cause internships provided for educational credit to be eliminated.

Resident apartment manager wages.AB 543 would authorize, under a voluntary written agreement, an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value of the apartment to meet minimum wage obligations to the apartment manager. Existing law allows employers to take a credit against minimum wage for two-thirds of the ordinary rental value, up to $564.81 per month for a single occupant and $835.49 per month for couples.

Credit Card gratuities. AB 1099 would require employers that are lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies that allow debit or credit card payment for services to also accept a debit or credit card for gratuities or tips. This bill would require the tip payment to be made to the employee by the next regular payday following the date the credit card authorized payment.

Overtime compensation: executive, administrative, or professional employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee, if the employee earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher.

Labor organizations: compulsory fee payments.AB 1174 would, beginning January 1, 2018, prohibit a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization.

Employer liability: small business and microbusiness. AB 442 would prohibit Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with 100 or fewer employees and an average gross of $10,000,000 or less over the past three years, or microbusinesses with 25 or fewer employees and an average gross of $2,500,000 or less over the past three years, without first giving the employer written notice of the violation and providing 30 days to cure. AB 442 would authorize Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement.

Immigration: worksite enforcement actions.AB 450, the “Immigrant Worker Protection Act,” would impose several requirements on public and private employers dealing with federal ICE workplace raids or enforcement actions. Assemblymember Chiu has described the key components as:

Requiring employers to ask for a warrant before granting ICE access to a worksite.

Preventing employers from releasing employee records without a subpoena.

Requiring employers to notify the Labor Commissioner and employee representative of a worksite raid and notifying the Labor Commissioner, employees, and employee representatives of an I-9 audit (i.e., employment eligibility verification).

Preventing retaliation by enabling workers crucial to a labor claim investigation to receive certification from the Labor Commissioner that employee complainant or employee witness has submitted a valid complaint for violations of the Code and is cooperating in the investigation and prosecution of the violations.

The bill would authorize the Labor Commissioner to asses penalties of at least $10,000 to $25,000 for each violation against employers for failure to satisfy the bill’s requirements and prohibitions.

FEHA enforcement expansion. SB 491 would expand Government Code section 12993 and allow local jurisdictions, such as cities and counties, to enforce FEHA discrimination regulations. Cal Chamber opposes this bill.

Good faith defense: employment violations.SB 524 would permit an employer to raise an affirmative defense that, at the time of a violation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. SB 524 would only apply after January 1, 2018 to DLSE opinion letters or enforcement policies that are still in effect at the time of the violation. Employers would not be able to claim an affirmative defense when a DLSE opinion letter or enforcement policy has been modified, rescinded, or deemed invalid. Cal Chamber supports this bill but hearings for SB 524 have been canceled at the request of the author, Senator Vidak. We’ll keep our eye on this to see if there is any further movement.

Reproductive health. AB 569 would prohibit employers from taking any adverse employment action against an employee based on the employee or employee’s dependent’s reproductive health decisions. The bill would also prohibit employers from requiring employees to sign a waiver or any document denying an employee the right to make his or her own reproductive health care decisions, including the use of a particular drug, device, or medical service (e.g., in vitro fertilization). The bill would require an employer to include in its handbook a notice of the employee rights and remedies under this bill.

New Parent Leave Act. Likely DOA, but resurrected for another go from its 2016 veto, SB 63, the “New Parent Leave Act,” would prohibit employers with at least 20 employees within 75 miles, from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Like under CFRA, to be eligible, the employee must have more than 12 months and at least 1,250 hours of service with the employer during the previous 12-month period. The bill would require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave. SB 63 would also allow—but not require—an employer to grant simultaneous leave when two employees are entitled to leave for the same birth, adoption, or foster care placement. This bill is almost identical to 2016’s SB 654, which Governor Brown vetoed, and only provided for 6 weeks of leave, rather than the 12 weeks SB 63 would provide. The Governor’s veto message expressed his concerns for impact the leave would have on small business and pointed lawmakers to explore an amendment that would have made mediation an option—which the SB 63 does not have.

PAGA: Three New Valiant Efforts. AB 281 attempts to reform PAGA by: 1) requiring an actual injury for an aggrieved employee to be awarded civil penalties; 2) excluding health and safety violations from the employer right to cure provisions; and 3) increasing employers’ cure period to 65 calendar days from 33.

AB 1429 would limit the violations an aggrieved employee can bring, require the employee follow specific procedural prerequisites to filing suit, limit civil penalties recoverable to $10,000 per claimant and exclude the recovery of filing fees, and require the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would require the Labor and Workforce Development Agency (LWDA) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of PAGA proposed amendments here.

Workplace Solutions

We will continue to monitor and report on these potential Peculiarities, as well as any other significant legislative developments over the course of the 2017 Legislative Session. Contact your favorite Seyfarth attorney with any questions.

Seyfarth Synopsis:The California Fair Employment and Housing Council (“FEHC”) has approved new regulations, effective July 1, 2017, to limit employers’ use of criminal history when making employment decisions.

Expanding the Types of Criminal History Employers May Consider: Employers will be prohibited from considering any non-felony convictions for marijuana possession if the conviction is more than two years old. (Current California law prohibits asking applicants to provide information concerning convictions for marijuana-related offenses that are more than two years old; detentions or arrests not resulting in conviction (except for those pending); convictions that have been judicially dismissed or ordered sealed; and information concerning a referral to or participation in a work/education program as part of probation.)

Requiring Notice to the Applicant/Employee of a Disqualifying Conviction and Providing a Reasonable Opportunity to Present Evidence of Factual Inaccuracy: Under the new regs, prior to taking adverse action, an employer must provide the applicant notice of the disqualifying conviction and give the applicant a reasonable opportunity to present evidence of factual inaccuracy. If the applicant produces such evidence, the conviction cannot be considered in the employment decision. The notice is only required when the criminal history is obtained from a source other than the applicant or employee (e.g., through a consumer report or internally generated search). This notice differs from the notice required by the Fair Credit Report Act (“FCRA”), which mandates notices only if the employer takes adverse action based on information contained in a third-party background check. This notice also differs from those in “Ban the Box” city ordinances, such as Los Angeles and San Francisco, where notice may be required if adverse action is taken from criminal history information from any source, including disclosure from the candidate.

Prohibiting Consideration of Criminal History When Doing So Will Result in an Adverse Impact on Individuals Within a Protected Class: Employers will also be prohibited from considering criminal history if doing so will result in an adverse impact (referred to by the EEOC as “disparate impact”) on individuals within a certain class (e.g., race, national origin, etc.). The regs bring California into explicit alignment with federal law on this point. Applicants bear the initial burden of proof with respect to establishing that the employer’s background screening policy has an adverse impact on a protected class, e.g., conviction statistics or other types of evidence. If adverse impact is demonstrated, the burden shifts to the employer to demonstrate that its policy is “job related and consistent with business necessity,” and tailored to the specific circumstances, taking into account factors such as those set forth in Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1975), i.e.,: (i) nature and gravity of the offense or conduct; (ii) amount of time since the offense or conduct and/or completion of the sentence; and (iii) nature of the job held or sought. (Bright-line disqualification policies that include convictions that are older than seven years create a rebuttable presumption that they are not sufficiently tailored.) Even if an employer can demonstrate job-relatedness and consistency with business necessity, an applicant or employee can still bring a claim if they can show that there is a less discriminatory alternative (such as a narrower list of disqualifying convictions) that advance the employer’s legitimate concerns as effectively as the current policy or practice.

Employer Outlook

Employers in California should review their policies on use of criminal history in hiring and modify any practices to ensure compliance with the new FEHC regulation (as well as the FCRA and applicable municipal Ban the Box ordinances, such as Los Angeles and San Francisco).

Pamela Q. Devata is a partner in Seyfarth Shaw’s Chicago office. Stacey L. Blecher is counsel in the firm’s New York office. If you would like further information, please contact your Seyfarth Shaw LLP attorney, Pamela Q. Devata at pdevata@seyfarth.com or Stacey L. Blecher at sblecher@seyfarth.com.

Seyfarth Synopsis: Employers in California: be aware and prepare for new laws increasing minimum wages and mandating overtime pay for agricultural employees; expanding the California Fair Pay Act to race and ethnicity and to address prior salary consideration; imposing new restrictions on background checks and gig economy workers; and more. Small employers will be relieved the Governor vetoed expanded unpaid parental leave, but it will likely return in future sessions.

Friday, September 30, was Governor Jerry Brown’s deadline to sign or veto bills approved during the 2015-2016 Legislative Session. We summarize below this year’s bills that did and did not receive the Governor’s signature. Read on to prepare for our October 6 webinar offering Workplace Solutions for these pesky new Cal-peculiarities and register here.

SIGNED

Pay Equity

Fair Pay Act: Prior Salary & Race/Ethnicity. Saving some high-profile approvals to the last day, on Friday the Governor signed into law AB 1676 and SB 1063. AB 1676 amends last year’s Fair Pay Act, Section 1197.5 of the Labor Code, to prohibit employers from considering prior salary as the sole justification for any disparity in compensation. SB 1063 expands the Fair Pay Act to race and ethnicity, and responds to critics that the pay equity issue is not limited to gender. Specifically, it would prohibit employers from paying employees a wage less than the wage paid to employees of a different race or ethnicity for substantially similar work. Since both bills were signed by the Governor, both bills’ substantive changes will become law, though only the last-chaptered bill will be that which officially becomes law.

Before amendments applied in the legislative process, AB 1676 would have prohibited employers from seeking an applicant’s salary history information just as its vetoed predecessor, AB 1017, attempted to do last year. In vetoing AB 1017, Governor Brown stated that we should wait to see whether last year’s momentous Fair Pay Act, SB 358, addressed the pay equity issue before making further changes. The amendments likely made this amendment palatable to the Governor, and kept California from matching the new Massachusetts law prohibiting Massachusetts employers from requesting the compensation history of a prospective employee before making an offer, unless the prospective employee has “voluntarily” disclosed that information. Amends Labor Code Sections 1197.5 and 1199.5. Effective January 1, 2017.

Wage and Hour

Agricultural Workers.AB 1066 enacts the “Phase-In Overtime for Agricultural Workers Act of 2016,” which requires employers to pay agricultural workers overtime over a four-year phase-in process. Beginning January 1, 2019, employers are required to pay overtime for any hours worked over 9.5 hours per day or 55 hours per workweek. Each year the hours worked triggering overtime pay will reduce, until reaching 8 hours per day, 40 hours per week, beginning January 1, 2022. Also beginning on January 1, 2022, any employee who works over 12 hours per day must be paid at a rate no less than double the regular rate of pay. The Governor may temporarily suspend the scheduled overtime requirement but only if the minimum wage increases are suspended as well. Employers that employ 25 or fewer employees will have an extra three years to comply with the phase-in and must begin paying overtime by January 1, 2022. This bill began as AB 2757, which failed to pass the house of origin in June. Undeterred, author Assembly Member Lorena Gonzales resurrected it with the legislative “gut and amend” trick, putting its contents into a bill formerly relating to educational employees. Amends Labor Code Section 554 and adds Chapter 6 (commencing with Section 857) to Part 2 of Division 2 of the Labor Code. Effective January 1, 2017.

Minimum Wage Violation Challenges. AB 2899 requires that any employer, before appealing a decision by the Labor Commissioner (LC) relating to a violation of wage laws, must file a bond—in favor of the unpaid employee—with the LC that covers the total amount of any minimum wages, liquidated damages, and overtime compensation owed. The bill also provides that the total amount of the bond is to be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings. Amends Labor Code Section 1197.1. Effective January 1, 2017.

Itemized Wage Statements.AB 2535 comes on the heels of the recent federal decision, Garnett v. ADT, and clarifies Labor Code section 226. This bill specifies that employers need not list the number of hours worked on wage statements for any employee who is exempt from minimum wage and overtime requirements under the applicable IWC Wage Order or under statutes specified in Labor Code Section 226(j). Amends Labor Code Section 226. Effective January 1, 2017.

Leaves of Absence

Paid Family Leave Expansion. AB 908, which the Governor signed on April 11, 2016, increases the amount of benefits paid to employees on paid family leave and state disability leave from the current level of 55 percent to either 60 or 70 percent depending on the applicant’s income. Read our report on AB 908 here. Affects Sections 2655, 3303, and 2655.1 of the Unemployment Insurance Code. Effective January 1, 2017, but provisions of the bill not operative until January 1, 2018.

Background Checks

Criminal History. AB 1843 prohibits employers from asking an applicant for employment to disclose any information regarding juvenile convictions and seeking or utilizing any information related to juvenile arrests, detentions, or court dispositions as a factor in employment determination. The bill does specify that an employer at a health facility can inquire into an applicant’s juvenile criminal background if a juvenile court made a final ruling or adjudication, that the applicant had committed a felony or misdemeanor relating to sex crimes or certain controlled substances crimes within five years prior to applying for employment. Still, these employers cannot inquire into an applicant’s sealed juvenile criminal records. Read more about existing California law on background checks here. Amends Labor Code Section 432.7. Effective January 1, 2017.

Unfair Immigration-Related Practices. SB 1001 is a redux of 2015’s AB 1065, which was held in committee (and which we reported on here). SB 1001, like AB 1065, makes it an unlawful employment practice to request more or different documents than required under federal law to verify that an individual is not an unauthorized immigrant, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, refuse to honor documents or work authorization based on specific status or term that accompanies the authorization to work, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. This year’s bill provision states that job applicants and employees who suffer an “unfair immigration-related practice” can file a complaint with the DLSE for enforcement. The bill provides that a violation of these provisions can result in a penalty of up to $10,000. Adds Section 1019.1 to the Labor Code. Effective January 1, 2017.

Transportation Network Companies

Background Checks. AB 1289 requires a transportation network company (“TNC”; e.g., Uber) to conduct, or have a third party conduct, criminal background checks on each participating driver. This bill follows a 2014 lawsuit that accused TNCs of misleading customers by suggesting their background checks were the toughest in the industry. The bill also prohibits a TNC from contracting with a driver who is currently registered on the DOJ’s National Sex Offender Public Website; has been convicted of specified felonies within the past seven years; and/or has been convicted, within the past seven years, of misdemeanor assault or battery, domestic violence, or driving under the influence of drugs or alcohol. Adds Section 5445.2 to the Public Utilities Code. Effective January 1, 2017.

Driving Under the Influence. AB 2687 makes it unlawful for a person to drive a vehicle with a blood alcohol level (BAC) of 0.04% or more when a passenger for hire is in the vehicle. The bill comes as an effort to lower taxi cab and ride sharing service driver’s BAC limit—currently at 0.08%—to the BAC limit of 0.04% as required for commercial motor vehicle drivers. Amends Vehicle Code Sections 23152 and 23153. Effective July 1, 2018.

Personal Vehicles. AB 2763 defines a personal vehicle, used by a participating driver in a transportation network company, as one that has a passenger capacity of eight persons or less, (including the driver) and is owned, leased, or rented for a term that does not exceed 30 days, or otherwise authorized for use by the participating driver. Amends Public Utilities Code Section 5431. Effective January 1, 2017.

Discrimination/Harassment

Employment Protections. AB 2337 expands the notice requirement employers with twenty-five or more employees must give to employees regarding domestic violence protections. Specifically, this bill provides that an employer must inform each new employee—and other employees upon request—of the rights protecting employees affected by domestic violence in writing. The Labor Commissioner is charged with developing the form providing notice by July 1, 2017. Employers are not required to provide notice until the Labor Commissioner posts the form. Amends Labor Code Section 230.1. Effective July 1, 2017.

Sexual Harassment Prevention Training. AB 1661 requires local agency officials to receive two hours of training and education on sexual harassment prevention within the first six months of taking office or commencing employment. To meet the requirements of this bill, local agency officials, including any member of a legislative body and any elected official of cities and counties, and special districts, must continue to receive this training once every two years. While AB 1661 is specific to local agency officials, AB 1825, enacted in 2004, established the same provisions for the workplace. AB 1661 comes on the heels of various high-profile sexual harassment cases against elected officials. Adds Article 2.4.5 (commencing with Section 53237) to Chapter 2 of Part 1 of Division 2 of Title 5 of the Government code. Effective January 1, 2017.

Employment Discrimination. AB 488 allows individuals employed under a special license in a nonprofit sheltered workshop or rehabilitation facility to bring an action under the Fair Employment and Housing Act (FEHA) for prohibited harassment or discrimination. This bill came as an expansion of AB 1443, enacted in 2014, which extended FEHA’s protections to unpaid interns and volunteers. AB 488 now extends FEHA’s protections to workers with disabilities. Amends Section 12926, and adds Section 12926.05 to, the Government Code. Effective January 1, 2017.

Other Employee Protections

Employment Contracts—Choice of Law and Forum. SB 1241 prohibits an employer from requiring an employee, who resides and works in California, as a condition of employment, to agree to a provision that would either require the employee to litigate or arbitrate employment disputes (1) outside of California or (2) under the laws of another state. The only exception is where the employee was individually represented by a lawyer in negotiating an employment contract. The bill provides that any contract that violates these provisions is voidable by the employee. A court may award an employee reasonable attorney’s fees, among other remedies, for enforcing rights under the act. Read our in-depth report on SB 1241 here. Adds Section 925 to the Labor Code. Effective January 1, 2017.

Employment Heat Safety. SB 1167 provides that the Division of Occupational Safety and Health (DOSH) shall propose to the Occupational Safety and Health Standards Board (Standards Board) for review and adoption, a standard that minimizes heat-related illness and injury among workers working in indoor places of employment by January 1, 2019. This bill comes as a response to a 2012 OSHA decision, upheld in 2015 by the Cal/OSHA appeals board, in which a staffing company and warehouse operator were fined for the heat illness suffered by an employee who was working inside a metal freight contained in over 100 degree heat. Adds Section 6720 to the Labor Code. Effective January 1, 2019.

Employee Contact Information. AB 2843 expands an existing provision of the California Public Records Act (CPRA) that exempts the homes addresses and home telephone numbers of certain public employees from public disclosure to now cover all public employees, including persons paid by the state to provide in-home support services. Additionally, this bill extends the CPRA exemption to include the employee’s personal cell phone number and birth date. However, telephone numbers will be made available to bargaining agents for those employees. Amends Government Code Sections 6253.2 and 6254.3. Effective January 1, 2017.

Industry Specific

Property Service Workers. AB 1978 creates the Property Services Workers Protection Act by establishing various requirements for the janitorial industry, including registering annually with the DLSE, to protect janitorial employees from wage theft and sexual harassment. The provisions of this bill apply to employers that employ at least one “covered worker” who enters into a contract, subcontract, or franchise agreement to provide janitorial services. This bill also requires the DLSE to maintain a database of property service employers and to develop a biennial sexual harassment and violence prevention training. This bill prohibits an employer from registering or renewing its registration if it has not fully satisfied any final judgment for unpaid wages or made appropriate tax contributions. “Successor employers” are also liable for any wages and penalties owed to the predecessor’s employees. The bill was signed while janitors were fasting outside of the Capitol. Adds Part 4.2 (commencing with Section 1420) to Division 2 of the Labor Code. Effective July 1, 2018.

Talent Services. AB 2068 updates the Talent Service Act’s existing communication and contractual protections to include new technologies, such as mobile applications. Specifically, AB 2068 strengthens the protection for an artist’s information or image to include information posted on an online service, online application, mobile application, or website. AB 2068 also updates the communication and advertisement protections between talent agencies and artists by including communication through the use of a telecommunication device, in print, on the Internet, or through the use of a mobile or online application or other electronic communication. AB 2068 also adds “text message” and other “electronic communication” to the list of methods by which an artist may ask that photographs and other information about the artist be removed from a website, online service, online application, or mobile application owned or serviced by the talent service. Amends Labor Code Sections 1703 and 1703.4. Effective January 1, 2017.

Work Experience Education. AB 2063 provides an additional option for a student, at least 14 years old, to participate in work experience education. The bill also increases the number of hours per week a student may participate in job shadowing from 25 to 40 hours per semester, if the principal of the school where the student is enrolled certifies that it is necessary for the student’s participation in a career technical education program. Amends Education Code Section 51760.3 and 51769. Effective January 1, 2017.

Commercial Online Entertainment Employment Services. AB 1687 addresses age discrimination in the entertainment industry by prohibiting a commercial online entertainment employment service (i.e., IMDb) that enters into a contract, from publishing a subscriber’s age or date of birth in an online profile. Proponents of this legislation cited cases such as Hoang v. Amazon.com, Inc, et al, in which a subscriber sued for having her age published on her profile page. The bill also requires that a service provider—upon request by the subscriber—remove age information from public view in any online profile under its control. Adds Section 1798.83.5 to the Civil Code. Effective January 1, 2017.

Other

Single-User Restrooms. AB 1732 requires all single-user toilet facilities in any business establishment, place of accommodation, or government agency to be identified as all-gender toilet facilities. The bill also provides that local officials responsible for code enforcement are to inspect for compliance. Adds Article 5 (commencing with Section 118600) to Chapter 2 of Part 15 of Division 104 of the Health and Safety Code. Effective March 1, 2017.

VETOED (i.e., “it coulda been worse”)

Parental Leave.SB 654 would have significantly expanded California’s parental leave laws by requiring employers with 20 to 49 employees to provide up to six weeks of unpaid, job-protected parental leave and paid health benefits to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Existing law—the California Family Rights Act—applies only to employers with 50 or more employees, and provides for at least 12 weeks of job-protected parental leave. The Governor vetoed this bill on September 30, stating: “It goes without saying that allowing new parents to bond with a child is very important and the state has a number of paid and unpaid benefit programs to provide for that leave. I am concerned, however, about the impact of this leave particularly on small businesses and the potential liability that could result. As I understand, an amendment was offered that would allow an employee and employer to pursue mediation prior to a lawsuit being brought. I believe this is a viable option that should be explored by the author.” In other words, we likely have not seen the last of this proposal.

Examination of Jurors. AB 1766 would have required that prospective jurors be referred to by either an identification number or abbreviation during voir dire in criminal trials. In his August 29 veto message, the Governor stated: “The open nature of criminal trials preserves both the defendant’s right to a fair and open trial, as well as the public’s faith in the court’s impartial application of the law. Under existing law, there are adequate remedies available if the court finds good cause to deny public access to the voir dire process or to specific juror information. These situations are best addressed on a case by case basis, and I do not believe there is a demonstrated need for a wholesale change at this time.”

BILLS THAT DIDN’T MAKE THE LEGISLATIVE CUT (i.e., “it coulda been a lot worse”)

Double Pay on the Holiday—2016 Edition. The Double Pay on Holiday Act of 2015 failed to make its way to the Governor for the second year in a row. AB 67 would have required retail and grocery store establishments, as well as restaurants located within them, to pay at least twice the regular rate of pay for employees who work on Thanksgiving.

Employee Time Off. AB 2405 would have required an employer to provide an employee at least eight hours annually of paid, job-protected, time off for an absence under the Family School Partnership Act. This bill came on the heels of SB 579, chaptered in 2015, which expanded the authorized reasons an employee can take job-protected time off under the Act and specified the definition of ‘family member” under California’s Kin Care. Read our report on SB 579 here.

Work Hours. SB 878 was similar to AB 357, the Fair Scheduling Act of 2015, which did not make it out of the Assembly. SB 878, the Reliable Scheduling Act of 2016, would have required that restaurant, grocery, and retail employers provide non-exempt employees with a 21-day work schedule in advance of their first shift on that work schedule. SB 878 would have required at least seven days advance notice. SB 878 would have required employers to pay “modification pay”—defined as compensation in addition to regular pay (the hourly rate calculated based upon 90 days prior)—if any scheduled shift is canceled, moved, or added, and for each shift for which an employee is required be on call but is not called into work.

Meal and Rest or Recovery Periods. AB 1948 would have provided a statutory remedy for an employer’s failure to provide a meal or rest or recovery period. The bill would have specified that the entire “penalty amount” was an additional hour or pay for each day that a meal or rest or recovery period was not provided to the employee.

California Workplace Flexibility Act. SB 985, SB 368’s predecessor, would have allowed employees to submit a written request for a flexible work schedule of up to four 10-hour days per week without obligating the employer to pay overtime for the 9th and 10th hours worked per day. The employer would have been obligated to pay overtime for any hours worked over 10 hours per workday or 40 hours per workweek.

Age Information in Employment. AB 984 would have prohibited an employer from using information obtained via websites regarding a person’s age to discriminate against an employee or applicant for employment. The bill also would have specified that a service provider is considered as doing business in this state and subject to California’s antidiscrimination laws when they knowingly accept payment from persons in California in exchange for posting their resumes and professional photos online.

Voluntary Veterans Preference Policy. AB 1383 would have created the Voluntary Veterans’ Preference Employment Policy Act to authorize a private employer to establish a written veterans’ preference employment policy. The bill also would have specified that granting a veteran preference, in and of itself, would not violate any local or state equal employment opportunity law or regulation, including, but not limited to, FEHA; and would have prohibited a veterans’ preference employment policy from being established or applied for the purpose of discriminating against an employment applicant on the basis of a protected classification.

Independent Contractors. AB 1727 would have established rights for independent contractors to organize and negotiate with “hosting platforms.” This bill would have provided a right for independent contractors to engage in “group activities” in an effort to negotiate through activities such as withholding work and boycotting or critiquing labor practices. The bill would have authorized an independent contractor or a representative of independent contractors claiming a violation under this bill to bring an action in superior court and to seek injunctive relief.

Employment Arbitration Agreements Discrimination.AB 2879, the “Service Member Employment Protection Act,” brought back the language of 2015’s AB 465, which the Governor vetoed (read our summary here), but limited the application to military service members, similar to USERRA. Specifically, the bill would have prohibited employers from requiring service members to waive any Labor Code protections, including the right to file and pursue a civil action or complaint, and would have prohibited employers from requiring service members to accept private arbitration, as a condition of employment, unless the waiver was “knowing and voluntary and not made as a condition of employment.”

DLSE Enforcement.AB 2261 would have provided the Department of Labor Standards Enforcement (DLSE) with new independent authority to, with or without an employee complaint, bring an action against an employer that it suspects may have terminated or otherwise discriminated against an employee in violation of any law under the jurisdiction of the Labor Commissioner. The authors of this bill argued that despite laws providing employees protection and encouragement to report abuse, the reality is that many workers do not report out of fear of losing their jobs. AB 2261 was built upon AB 970, which the Governor signed into law last year, and which we wrote about here.

Employee Safety. AB 2895 would have required an employer to keep at each worksite with three or more employees a complete, updated copy of the currently required written injury prevention program and make it available for inspection by any employee or by the Division of Occupational Safety and Health upon request. The bill would have also required an employer to inform each employee of the availability, and employee’s rights, to inspect and receive a copy of the injury prevention program. Additionally, an employer that received a written request would have had to comply within a specified timeframe. The bill would have also entitled the employee to injunctive relief if the employer did not timely respond to the request.

Human Trafficking Training.AB 1595 would have required public and private mass transportation providers (bus, train, light rail, etc.) to provide training to recognize and report the signs of human-trafficking to employees who were likely to interact with victims of human trafficking. AB 1942 would have required the same training as AB 1595 but it was specific to hotels and motels that provide lodging services.

Sexual Offenses Against Minors. AB 2199 would have defined a two-year sentence enhancement where a defendant who committed a sex crime against a minor held a position of authority over the minor. The bill specifically provided that a person in a “position of authority” included, but was not limited to, a stepparent, foster parent, partner of the parent, youth leader, recreational director, athletic manager, coach, teacher, counselor, therapist, religious leader, doctor, or employer, or employee of one of the aforementioned persons.

PAGA.AB 1317 expanded on last year’s bill, AB 1506, which was signed by the Governor, that gave employers a limited right to cure certain wage-statement violations before an aggrieved employee could sue under PAGA. This bill would have provided an employer a right to cure any violation of the Labor Code before an employee could sue and would have provided an appropriation to the Labor and Workforce Development Agency to establish new positions to review and investigate PAGA cases. This bill was stuck in the Senate committee on rules.

PAGA Reform. None of the bills in this year’s five-bill Private Attorneys’ General Act (PAGA) reform package made it out of the Assembly. Those bills were:

AB 2461 would have limited the violations an aggrieved employee was authorized to bring and required specific procedures before suing.

AB 2462 would have provided employers with a right to cure before an employee brought a civil action.

AB 2463 would have established a penalty cap of $1,000 for each aggrieved employee.

AB 2464 would have authorized a court to dismiss an action if the court found the aggrieved employee suffered no appreciable physical or economic harm.

AB 2465 would have required the Labor and Workforce Development Agency to investigate alleged violations and determine if there was a reasonable basis for a civil action.

Workplace Solutions.

Head spinning? We’ll summarize all the new and almost-laws and give you practical tips to prepare for them in our webinar on October 6. Register here. Or feel free to contact any of the authors or your favorite Seyfarth attorney with any questions.

Seyfarth Synopsis: When employee theft occurs, employers must be cautious in investigating, avoiding self-help, and in deciding if and how to terminate the offending employee.

Companies work hard to hire trustworthy employees, but employee theft can occur in any business. Employee theft takes different shapes—you may discover an employee is stealing products, supplies, confidential information or money from the company; an employee may steal more surreptitiously by padding time on a time sheet; or an employee may intentionally fail to enter vacation time taken in order to get paid for that time when they quit. Whether subtle, or as brazen as a famous thief (see https://en.wikipedia.org/wiki/Catch_Me_If_You_Can), any form of employee theft hurts your business and can present you with a difficult management situation.That’s why we’re here to help with the following tips.

“An Honest Man Has Nothing to Fear”—Background Checks:

Inquiring into an applicant’s history can be a useful tool to identify people with a propensity toward dishonesty, but if you use background checks, make sure you follow the rules about collection and use of information.

a) California law prohibits use of consumer credit reports for employment purposes except when hiring for certain specified positions, such as managers, peace officers, positions that involve regular access to personal and banking information of individuals, access to $10,000 or more of cash, or access to confidential or proprietary information of the employer. (Labor Code § 1024.5.)

b) State and local agencies (as well as employers in San Francisco and Richmond) cannot use information about criminal history unless and until a decision about the candidate’s minimum qualifications has already occurred. (See. e.g., Labor Code 432.9 and San Francisco Fair Chance Ordinance.)

c) In addition, under federal law, criminal history may not present an automatic barrier to employment; there must be a relationship between the criminal activity and the important elements of the job, and employers should consider the number of convictions, their nature and seriousness, how recent they are, and evidence of rehabilitation.

For the kinds of background inquiries that are permitted, make sure that you provide the appropriate disclosures, get permission from the prospective employee, and provide a copy of the background check report if requested. See our prior posts on California background check requirements here.

A thorough pre-employment background check should include:

criminal history (if permitted) for crimes involving violence, theft, and fraud (in California you can only check back 7 years; you cannot ask about marijuana-related convictions that are more than 2 years old, or arrests that did not result in conviction)

civil history for lawsuits involving collections, restraining orders, and fraud

driver’s license check for numerous or serious violations

education verification for degrees from accredited institutions

employment verification of positions, length of employment, and reasons for leaving.

“People Only Know What You Tell Them”—Verify Past Employment:

Even though most employers will verify only position and dates of employment, a prospective employer may be able to tell by the tone of voice whether the former employer had issues with the employee. A prospective employer should consistently ask previous employers whether the applicant is eligible for rehire.

Develop a written policy regarding timekeeping, with specific instructions on the duty of honesty and prohibition against timekeeping fraud. You should also have an employee handbook that covers the policy and the penalties for theft. In addition, it is a good idea to have clear written policies posted in the workplace regarding stealing, what types of acts constitute stealing and the consequences that will be enforced if an employee is caught stealing. Translate your policies into the languages spoken by your workforce. Have your employees acknowledge in writing that they have read and know the policies.

What to Do (and Not Do) If You Think an Employee Is Stealing

Investigate … With Care and Document Results.

An allegation of theft is serious and an employer should be very careful in planning, carrying out and documenting the investigation. There should always be at least two individuals involved in the investigation and, ideally, at least one of the investigators should not know the accused. If the company has a protocol for an investigation, follow it closely. Let the accused employee tell his or her story and include it as part of the record of investigation.

Do Not Withhold Missing Amounts of Money From the Employee’s Paycheck.

An employer can lawfully withhold amounts from an employee’s wages only under very limited circumstances, and employee theft or suspected theft is not one of them. (Labor Code Sections 221 and 224.) In fact, court decisions and the IWC Wage Orders specifically regulate an employer’s ability to deduct amounts from an employee’s wages due to cash shortages, breakage or loss of equipment. So, if you lose some equipment or merchandise, or find that cash is missing, resist the urge to take an offset against the suspected offending employee’s wages, and instead find out how to respond correctly.

To Terminate or Not To Terminate?

This determination depends heavily on how strong the evidence is against the employee. If the evidence is not conclusive, you may want to be careful about telling an employee that he or she is being fired for theft, dishonesty, or suspicion of theft. Accusing an employee of a crime may be considered defamatory and should not be done unless the employer is 100% certain. Instead, the cautious employer will cite to lack of trust, or loss of confidence as the reason for termination. Or, even better, connect the termination to a violation of policy or procedure. Even this less dangerous road can contains land mines, as inconsistent enforcement of a work rule could potentially lead to claims of discrimination.

Workplace Solutions: “Don’t Be a Stranger” when it comes to consulting your counsel regarding the appropriate response to employee theft, including whether to terminate an employee for stealing. In the event you find yourself depending against any resulting claims, you will want to make sure your actions were well thought out and well documented.

About

Published by Seyfarth Shaw LLP, this blog is for in-house attorneys, HR professionals, business owners, and managers who face real issues on a daily basis and need practical solutions to address them. We aim to provide timely, topical information on the challenges that California employers face. Unlike blogs that simply provide legal updates, this blog will have a running series of Workplace Solutions that will address evolving areas of interest, including California leaves of absence, recruiting and hiring, trade secrets, and the use of social media.